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Dec, 11 2015

United Spirits give up ready-to-drink market

USL hinted at lack of scale in domestic RTD sales for the review while industry observers said the company, which is battling a debt burden.

United Spirits, the largest Indian distiller controlled by Diageo Plc, is pulling back from the ready-to-drink (RTD) market barely a year after launching Smirnoff Ice in a head-on battle with Bacardi, reported TNN.

USL hinted at lack of scale in domestic RTD sales for the review while industry observers said the company, which is battling a debt burden, didn't want to support an unviable category for the time being.

USL has stopped production of Smirnoff Ice, a pre-mixed vodka drink, which it had launched in few markets starting with Karnataka and Goa, multiple said industry sources. The introduction of Ice, a blockbuster Smirnoff trademark globally, was pegged as a major move by USL following Diageo's $3 billion takeover.

"The latest initiatives of USL appear to prioritize leadership products. Indian RTD market continues to witness entry and exit of brands lured by high growth of 20-25% engaging youth. Yet most have not been able to match the focus and innovation of Bacardi Breezer, which continues to dominate and define the category," said Sanjay Jain, director, Taj Capital, a New Delhi-based investment advisory firm.

"Based on our learning’s, we are reviewing our product and pricing strategy around this important innovation platform to ensure that it has a 'scale' play in the RTD category in the near future. RTD is a big driver for Smirnoff's growth in its biggest markets, US and UK," said United Spirits spokesperson.

USL didn't specify a timeline for the re-launch of Smirnoff Ice stating the plans were still in the works.

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