Whyte & Mackay owner United Spirits reported a slump in sales but saw profits double in its most recent quarter of trading.
India’s largest spirits group, which owns Scottish brands including Jura and Dalmore, said sales had fallen 8% to £205.6million for the quarter ended 30 September as high prices hurt demand and the company lost market share to rivals.
But profits at the firm more than doubled to £9.4million in its second quarter compared with the same period the year before, as signs that its controlling shareholder Diageo was making progress reforming the group.
United reported a drop of 1% in volumes for the first time in several years as demand fell for its cheaper brands such as Bagpiper.
The Bangalore-headquartered group, which still controls over half of India’s liquor market, has been trying to shift sales toward higher priced brands including McDowell’s No.1 whiskey, Royal Challenge and Antiquity. These three brands reported growth between 15-25% in the first half of the year, the company said.
Market watchers in India have reported that the firm lost market share to rivals in the first half of the year, including French company Pernod Ricard.
Diageo completed its purchase of a 25% stake in United in July from the company and chairman Vijay Mallya.
The London-based whisky and spirits giant has made compliance and cost-cutting the top-most priorities at United, which contributed to the drop in volumes.
Diageo is also fast reducing the company’s debt which stood at £716.7million as of 30 September, compared with £797million on the prior quarter.
Costs also dropped 20% to £13.6million.
Competition authorities in the UK are still reviewing Diageo’s purchase of the stake in the Indian spirts group.
In July, the Office of Fair Trading said it would investigate whether the deal signed between the Johnnie Walker owner and the Indian spirits giant would have a detrimental impact on the spirits market.
Diageo, which owns leading blended and single malt whisky brands such as Talisker and Lagavulin, is the world’s biggest Scotch whisky producer.
The London company’s stake in United Spirits is still a minority shareholding but combined with voting and other governance arrangements is considered enough for control.