Allied Blenders targets 18% margin by FY28 on premium push

What the company is aiming for

Allied Blenders and Distillers (ABD) is targeting core earnings margins of about 18% by fiscal year 2028, according to comments by managing director Alok Gupta to Reuters. The company is linking its margin roadmap to a richer premium portfolio and expected cost benefits if the India-UK free trade agreement (FTA) lowers import tariffs on bulk Scotch whisky. ABD, known for Officer's Choice whisky, said its core earnings margin was 12.7% in fiscal 2025. Management expects the next step-up in profitability to come before FY28, with a near-term lift planned by the second half of fiscal 2027.

Premium and prestige products are taking centre stage

ABD has been expanding its premium and prestige portfolio and widening distribution beyond its core markets. The strategy is anchored in a broader consumer trend: a growing base of affluent Indian consumers spending more on higher-end spirits. The premium segment has also been a key growth driver for larger peers such as Radico Khaitan and United Spirits, which signals a wider sector opportunity rather than a one-off company move. In ABD’s case, the company has also been building a luxury and super-premium business under the ABD Maestro brand, which Gupta said is expected to double sales in the fourth quarter.

India-UK FTA: why the Scotch tariff matters

A key lever highlighted by management is the potential cost saving from the proposed India-UK free trade pact. As cited in the Reuters report, the tariff on imported bulk Scotch whisky is expected to reduce to 75% from 150%. If implemented, the lower duty could reduce input costs for companies that import bulk Scotch, supporting margins over the medium term. ABD flagged this as a meaningful tailwind alongside its portfolio premiumisation efforts.

Margin trajectory: the milestones ABD has flagged

ABD expects margins to increase by 200 basis points by the second half of fiscal 2027, with further gains after that. The company’s FY25 core earnings margin is stated at 12.7%, setting the base for its FY28 ambition. In other parts of the provided text, ABD’s stated FY28 margin ambition is also referenced at about 17%, indicating a broadly similar target band of roughly 17% to 18% by FY28. The underlying drivers presented are consistent: higher contribution from premium brands, efficiency gains, and policy-led cost reductions.

Bottling investments and capacity build-out

To support growth, ABD has already invested INR 525 crore to set up its own bottling units. It also allocated an additional INR 110 crore in January to expand in-house bottling capacity. These moves are positioned as operational enablers to support premium expansion and distribution scale, while also improving control over key parts of the supply chain. Separately, the text also notes that ABD agreed to acquire a non-operational distillery-cum-bottling facility in Uttar Pradesh for INR 70 crore.

Changing consumer behaviour: flavours and at-home cocktails

ABD also linked part of its recent product momentum to post-COVID shifts in consumption. Gupta said socialising at home has increased and cocktails have become more mainstream. The company launched two flavoured variants and said more than 30% of its sales volumes come from flavours. For spirits companies, flavour-led extensions can be an important lever for brand relevance and premium pricing, especially in younger consumer cohorts, though ABD’s comments were focused on the current mix rather than a forecast.

Recent performance: profit up, revenue down

For the December quarter, ABD reported a 16% rise in profit to INR 66.48 crore, even as revenue slipped 17% due to changes in excise duties. The combination is notable because it suggests profitability was supported despite a topline setback linked to state-level tax changes. The company did not provide a detailed revenue figure in the Reuters excerpt, but it attributed the revenue decline directly to excise-duty changes.

Key data points at a glance

Market impact: what investors typically track from such updates

For investors in listed liquor companies, three parts of ABD’s update stand out. First, the tariff change referenced under the India-UK FTA could influence input costs for bulk Scotch imports and may support margin expansion if the duty reduction materialises as stated. Second, the company’s margin bridge is tied to premiumisation and capacity investments, which implies execution will be monitored through mix shift, distribution expansion, and operating leverage. Third, the December-quarter print highlights the continuing sensitivity of reported revenue to excise-duty changes, a recurring feature of the Indian alcobev market.

Why the story matters for the broader spirits sector

ABD’s comments align with a wider theme across Indian consumer companies: premium segments often grow faster and carry better margins than mass categories. Peers such as Radico Khaitan and United Spirits are cited as examples where premium spirits have been a key growth driver, reinforcing that ABD’s approach is part of an industry-wide competitive shift. The operational emphasis on bottling capacity also fits the broader playbook of improving supply chain control to support brand-building and product consistency.

Conclusion

ABD has laid out a margin target of about 18% by FY28, backed by premium portfolio expansion, higher in-house bottling capacity, and potential cost relief if the India-UK FTA lowers bulk Scotch tariffs to 75% from 150%. Near-term, the company expects a 200-basis-point margin improvement by the second half of FY27. Investors will track how the premium and luxury portfolio scales alongside the impact of excise-duty changes and any concrete progress on the FTA-led tariff reduction.