‘USL should be free of debt in 4 to 6 quarters’


Hina Nagarajan, managing director and CEO of Diageo India that controls United Spirits Ltd, on Thursday announced a strategy refresh for the country’s largest liquor company. It includes reshaping the portfolio with more focus on premium spirits, building a future-ready organization and meeting sustainability goals. Edited excerpts from an interview:

What does the strategy reset entail?

Our mission is to be a top performing consumer products company in India, delivering double-digit profitable top line growth and long-term value to all our stakeholders. We will deliver our mission through three pillars that form the essence of our strategy—reshape our portfolio, while delivering our guidance of mid-to-high teens margin, creating an organization of the future and defining and executing an ambitious role for Diageo in society.

Within our portfolio reshape, we will accelerate growth in luxury and premium categories, especially in Scotch, where we are market leaders, and activate our global Luxury and Reserve portfolio. We will strengthen our play in upper prestige with highly differentiated offerings that speak to new consumer cohorts. We will reshape the value proposition in lower-and-mid prestige (brands), investing in and premiumizing McDowell’s No.1 whiskey and restaging Royal Challenge to drive recruitment.

We will be creating new engines of future-backed growth through transformational innovation and tapping into emerging opportunity spaces and fast-growing segments. The second pillar we will create is a future-ready organization through digital acceleration, talent and culture as growth drivers and by driving speed and simplicity within the organization. And our third pillar is Diageo and society—our stakeholders are increasingly challenging businesses to show how they make a positive impact across all aspects of society. Since the acquisition, we have a strong track record in sustainability and citizenship. We want to challenge ourselves to go much further with more ambitious targets. We will drive ESG from grain-to-glass moving India to drink better, not more, and lead in inclusion and diversity.

What happened to the strategic review of mass market brands announced earlier?

We announced that in January-March and we said that we will close that out by the end of this year. That strategic review is under way—it’s on track. So, this was a portfolio of several brands—Bagpiper whisky, Hayward’s whisky, etc. We are looking at various options actually—it could be extending the franchise model further for these brands or changing the operating model or selectively investing behind some of these brands to accelerate them or even divestment. At this point in time, we are exploring the implications of all the options.

What price points are we talking about in USL’s premiumization journey?

We’re talking really the beginning of prestige and above—that’s where McDowell’s No.1 sits. And the journey of premiumization is really people moving up this ladder—from popular brands (mass brands), the lower brands and then coming into No.1, then moving to Royal Challenge whiskey, then to Signature, and eventually, the Scotches. You also have direct entrants coming into these categories with the increasing affordability in the country. So, it’s basically this whole upward movement and going for better brands and more premium brands through the chain.

USL has been working towards reducing debt. How far are you from being a zero-debt company?

The run rates are visible quarter-on-quarter. I would say over the next four-to-six quarters, is our guess, we should be pretty debt-free. As we wipe out also our accumulated losses, we want to first look at a steady rate of dividend payout to our shareholders, and then look at other growth opportunities.

Will you continue to be associated with cricket?

Very much so—RCB or Royal Challengers Bangalore is a very integral part of our business and we are very proud of this asset. We are fully committed to it. We are very happy with the valuations as you’ve seen in the recent IPL bids.

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