Synopsis: Radico Khaitan’s profit is surging faster than United Breweries due to premiumization, strong Andhra Pradesh gains, margin expansion, and success in exports and backward integration.
The Indian liquor market shows contrasting performances between United Breweries (UBL) and Radico Khaitan despite both trading at premium valuations exceeding 100 times price-to-earnings (P/E) ratios.
Radico Khaitan has recorded a remarkable profit acceleration this fiscal year, driven by a focused premiumization strategy and strong market share gains. Meanwhile, UBL faces volume declines and margin pressures despite gains in some premium segments. This article explores the critical reasons behind Radico Khaitan’s stronger profit growth relative to United Breweries.
Strong Premiumization Drives Radico’s Growth
Radico Khaitan’s aggressive push into the luxury and premium spirits category significantly boosted its results in Q2 FY26. The company targeted ₹500 crore revenue from its premium segment with new launches of premium whiskies and white spirits, such as Morpheus Super Premium Whisky and The Spirit of Kashmyr vodka variants.
This premium focus expanded its operating margin to 15.8%, the highest in recent quarters, despite a greater mix in the regular category. The premium segment now contributes around 44% of Radico’s IMFL volumes and 68% of its IMFL value, showsing the impact of this strategy.
The company’s key brands like Magic Moments vodka, After Dark whisky, and Royal Ranthambore have shown double-digit volume growth, further accelerating profitability.
Andhra Pradesh Market Expansion
A critical driver of Radico’s profit jump is its dominant market share growth in Andhra Pradesh. The state’s liquor policy change facilitated easier market access and consumer choice, enabling Radico’s market share to rise from about 10% a year ago to over 30% in Q2 FY26.
This market expansion led to a strong rebound in its regular segment, which grew volumes by 79.6%, rebounding after nearly nine quarters of decline. Alongside Andhra Pradesh, Radico enjoys double-digit growth in other states, supported by an extensive network of over 75,000 retail outlets and contracts with government Canteen Stores Department (CSD). These barriers to entry and increased availability helped Radico capture critical share in a competitive market.
United Breweries Faces Volume Declines
In contrast, United Breweries experienced a 3% volume decline in Q2 FY26, impacted by an unusually strong monsoon, retail licensing transitions in Telangana, and affordability pressures in key states. Despite a 17% growth in its premium beer segment, total volumes fel. Costs rose with increased brand investments and commodity price pressures on cans and malt.
Although UBL gained about 100 basis points in national market share, challenges like brewery flood damage and supply constraints in Uttar Pradesh limited growth prospects.
Innovation, Exports, and Backward Integration Strengthen Radico
Radico’s diversified approach also contributed to its profit surge. The company expanded exports across 85+ countries with brands like Rampur Single Malt and Jaisalmer Indian Craft Gin, adding high-margin revenue streams.
Strategic backward integration through its Sitapur distillery running at 95% capacity allows Radico to produce its own Extra Neutral Alcohol (ENA), reducing raw material costs by ₹6–9 per liter.
This integration underpins its premiumization efforts and margin enhancement. Radico also launched eight new smaller SKUs to boost sampling and trial and tested new luxury variants, positioning itself well for sustained growth through innovation and market differentiation.
Written By Fazal Ul Vahab C H
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