Officer’s Choice – Number One Whisky in the World

Johnnie Walker Takes a Back Seat

Johnnie Walker Takes a Back Seat
Johnnie Walker Takes a Back Seat | Source

Success through High Volume

Johnnie Walker Takes a Back Seat

What is the latest buzz going on in liquor industry? By the way do you know the largest selling whisky brand in the world? Your guess Johnnie Walker is wrong. An Indian brand Officer’s Choice is at the top of the world when it concerns to whisky. You will be appreciating the shrewdness of Vijay Mallya in making the brand number one in the world. Again your guess is wrong. The credit goes to Kishore Chhabria and not Vijay Mallya. Kishore Chhabria, unlike his famous late brother Manu Chhabria, does not like to come in the media glare. Manu Chhabria ran his company Shah Wallace and other firms like a dictator and gave a tough fight to Vijay Mallya. When he passed away in 2002, Mallya would have heaved a sigh of relief. But now his brother Kishore is giving sleepless nights to Mallya is it not? No again. Mallya is already tormented by the Kingfisher Airlines problems. No new worry can affect him any more. Kishore’s success could only worry the global giant Diageo.

Officer’s Choice Costs Less

Kishore Chhabria himself had many quarrels with his illustrious brother Manu Chhabria. But now he is living high with his success. In 2011, Officer’s Choice whisky sold 17.10 million cases followed by Johnnie Walker (16.68 million cases), McDowell’s (16.39 million cases) and Bagpiper (16.03 million cases). The beauty of the success of Officer’s Choice is that the whisky does not cost much compared to others but still it enjoys the same status in liquor parties wherein bigwigs participate. A bottle of Officer’s Choice whisky costs anywhere between Rs.250 and Rs.400 depending on the state taxes. Rediffusion DY & R, which designed the package and name, should be a proud company now. It was Shaw Wallace that brought out the product in 1988 when Kishore was its head. But after differences developed between the brothers, Kishore moved to his own stable BDA Ltd and took the brand Officer’s Choice also with him.

BDA Became ABD

The rivalry between Kishore and Manu was such that Kishore agreed to make BDA Ltd a subsidiary of rival Mallya’s Herbertson’s in return for a 26% stake. But soon this new love also failed and Kishore walked out of Herbertson’s with his brand. After Manu’s death in 2002, Mallya acquired Shaw Wallace from Manu’s wife Vidhya Chhabria for a huge amount. He also filed a suit against Kishore with regard to BDA and Officer’s Choice. The legal battle lasted for years. But this year two months back the court directed Kishore to pay a compensation of Rs.8 crore to Mallya. As per the advice of Pricewaterhouse-Coopers, BDA was renamed as Allied Blenders & Distillers Pvt Ltd, an acronym of the old company.

Success through High Volume

The success of Officer’s Choice was ensured through high volume sales, sacrificing margins. This is Chinese business policy. China has become number one exporter in the world because of focusing on high volumes and selling at low profits. Officer’s Choice enjoys a margin of around Rs.175 per case. Of course Chhabria also has high margin premium products like OC Blue whisky, Jolly Roger rum, Kyron brandy, Wodka Gorbatschow vodka and other products. Officer’s success was achieved without any control over the bottling units unlike other liquor companies. Many liquor companies have their own distillery units to produce captive ethanol for their products. But ABD (read BDA) has no captive capacity and has to buy its requirements from outside. This is undoubtedly a drawback for the firm.

IPO Ruled Out

For all these achievements, one might be tempted to think that ABD is India’s number one liquor company. But it is only third next to Vijay Mallya’s United Spirit and Pernod Ricard. The company’s financial performance is also not all that exhilarating to demand a recommendation for buying its shares (anyway one cannot buy a private company’s shares in the stock market). It made a profit of around Rs.14.5 crore on a turnover of Rs.500 crore last year. If Kishore wants to uplift the finances of the company he is heading, he needs to invest a lot. An IPO is ruled out at this stage as market is yet to pick up though it is showing signs of revival following the door being opened to FDI (Foreign Direct Investment) by the central government. Therefore the only option for him is to tap private equity funds. This he can do so with the status conferred on him by Officer’s Whisky brand.

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