Bacardi eyes stake in Mallya company

BANGALORE: The world’s largest privately-held spirits company Bacardi will shed its slow- mover tag in India and pursue acquisition opportunities in the region. Bacardi could be in the reckoning if Vijay Mallya-led United Spirits (USL) went ahead with private placement of minority stake in the company.

“We have been 'very slow' in growth markets like India, but that is changing now. The Bacardi family and myself as chief executive are committed to it,” Andreas Gembler, Bacardi CEO, told ET.

He said the Bermuda-based drinks giant would look at inorganic growth opportunities provided it was profitable and carried distribution muscle.

Mr Gembler indicated that Bacardi will be interested in USL’s potential move for private placement of treasury stocks with a strategic partner. “I will not exclude that. Mr Mallya is a respectable competitor who knows what he is doing,” Mr Gembler said, while replying to a query, adding he had met India's liquor czar in international industry forums.

Bacardi’s Asia Pacific commercial operations director Harold Dyrvik, clarified that “nothing is at work with United Spirits at present”. Earlier this year, Mr Mallya had said that he received unsolicited interests from several suitors for buying a small stake in USL.

"They know that I hold treasury stocks and want to explore possibilities," he said. In January, ET reported that UK-based spirit giant Diageo, makers of Johnnie Walker whiskies and Smirnoff vodka, has held talks with USL for buying into USL.

It is believed that USL could offload treasury stocks representing 10-12% stake in the company. The treasury stocks were generated from the overlapping capital of merging group companies, especially Shaw Wallace (SWC), into USL.

The overlapping capital is banked in a trust with each share quoting a reserve price, which could be offloaded as a de-leveraging option. Sources said USL could be open to offering shares at a price band of Rs 2,500-3,000 per share, which constitutes a significant premium to the prevailing market price.

Meanwhile, Bacardi, with annualised sales of just around one million cases in India has lagged behind global peers Diageo and Pernod Ricard. The global giant has been scouting for buyout opportunities in a market heavily dominated by Mr Mallya's spirit empire.

It looked at some of the traditional spirits companies that have increasingly become regional players in a consolidating drinks business, but without a breakthrough till now.

Mr Gembler and Mr Dyrvik said India and China were the company's priority growth markets. In context, it may be mentioned that Bacardi recently effected a rejig of the domestic top management bringing in Mahesh Madhavan, earlier MD of Thailand operations, to head the Indian unit.

Bacardi, which is closely identified with the leading white spirits bands like Bacardi Carta Blanca Rum and Grey Goose Vodka, is in the midst of pushing its scotch portfolio represented by Dewar's and Aberfeldy into emerging markets.

“The message to the team is: premium, premium, premium. The thrust will be on the premium age profiles of Dewar's scotch, and not on the standard offering (Dewar's White Label),” Mr Gembler said.

Bacardi operating brand portfolio in India include locally bottled Carta Blanca white rum, Eristoff vodka, Bacardi Breezer RTD and imported brands like Grey Goose vodka, Bombay Sapphire gin, 42 Below vodka and Dewar's 12 year-old scotch.