Som Distilleries and Breweries Navigates Market Headwinds with Strategic Growth in Q2 FY26

Som Distilleries and Breweries Limited, a prominent player in India's alcoholic beverages sector, has reported a resilient performance for the second quarter and first half of fiscal year 2026. Despite a marginal decline in total income, the company demonstrated robust profitability and strengthened its operating margins, showcasing its ability to adapt to market dynamics and execute strategic initiatives effectively. The consolidated total income for Q2 FY26 stood at INR 476.79 crore, a 7.2% decrease from INR 509.58 crore in Q2 FY25. However, EBITDA for the quarter surged by 15.1% year-on-year to INR 40.52 crore, with the EBITDA margin expanding to an impressive 15.0%. Net profit also saw a healthy growth of 4.3% to INR 19.50 crore, reflecting sustained operational efficiency.

The company's performance was characterized by a mixed bag across its product segments. The beer segment, which constitutes the majority of its revenue at 80.5%, experienced a 19% year-on-year decline in volumes during Q2 FY26. This underperformance was primarily attributed to taxation issues in Karnataka and an industry-wide slump that affected beer sales. However, management expressed confidence in a strong recovery in Q3 and Q4, particularly from states like Odisha and Karnataka, bolstered by new product launches. In contrast, the IMFL (Indian Made Foreign Liquor) portfolio emerged as a significant growth driver, recording an approximate 65% volume growth during the quarter. This surge was fueled by strong brand performance, strategic market execution, and rising consumer demand for legacy brands like Black Fort and Milestone, alongside the encouraging performance of newly launched premium products.

Strategic Initiatives and Market Expansion

Som Distilleries is actively pursuing several strategic initiatives to drive future growth and expand its market footprint. A key project is the greenfield integrated Alcobev manufacturing facility in Farrukhabad, Uttar Pradesh, under its wholly-owned subsidiary, Woodpecker Greenagri Nutrients Private Limited. Phase I, focusing on a brewery, is on track for completion by FY27, with the plant expected to be operational by June 2026. This expansion is crucial for enhancing product availability in Uttar Pradesh and the northern region, addressing existing capacity constraints, and strengthening the company's production capabilities. Phase II will include a distillery, further diversifying its product portfolio.

The company's premiumization strategy is gaining momentum with the successful launch and expansion of Mahavat, a premium whiskey. Initially rolled out in Madhya Pradesh and Delhi, Mahavat is slated for expansion across Northern India within the current or next quarter. This move aims to disrupt the competitive whisky category and bolster Som's presence in the premium alcobev space. Furthermore, Som Distilleries is preparing to enter the single malt segment, with plans for market rollout in key cities like Mumbai by Q4 FY26, anticipating high revenue and margin contributions from this premium offering.

Operational Efficiencies and Future Outlook

Operational efficiencies played a pivotal role in the company's improved margins. Despite lower sales, the gross margin expanded to 41.06% in Q2 FY26 from 40.01% in Q2 FY25, driven by a better product mix and cost optimization initiatives, including effective management of returnable glass bottles. Beer realization for Q2 FY26 increased to INR 607 per case from INR 531, influenced by a favorable mix of beer sold and higher realization from the Hunter brand. However, IMFL realization saw a decrease to INR 939 per case from INR 1,038, which management attributed to a change in brand mix within specific markets.

Looking ahead, Som Distilleries is focused on leveraging its strategic investments and brand strength to achieve sustained growth. The company anticipates adding approximately INR 800 crore in revenue for the remaining six months of FY26, projecting a total income of around INR 1,600 crore for the full fiscal year. The management is committed to expanding its premium portfolio, strengthening market positioning through product innovation, and operational excellence. The successful entry into new markets like Tamil Nadu, where it gained nearly 2% market share in six months, and strategic placement of brands in airport channels, underscore its proactive approach to market development.

Conclusion

Som Distilleries and Breweries Limited's Q2 FY26 performance reflects a company strategically navigating market challenges while laying robust foundations for future growth. With a clear focus on expanding its premium portfolio, enhancing production capabilities through greenfield projects, and optimizing operational efficiencies, the company is well-positioned to capitalize on emerging opportunities in the dynamic Indian alcoholic beverages market. The disciplined execution of its strategic initiatives, despite temporary market softness, reinforces management's commitment to delivering consistent value to its stakeholders.