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Bacardi on the prowl to acquire IMFL brands -- Company targets 2003 to break even

Boby Kurian

BANGALORE, August 2

BACARDI Martini India Ltd (BMIL), a 74:26 joint venture between Bermuda-based Bacardi and Gemini Distilleries in Mysore, is on the look-out for brand acquisitions in India as part of its strategy to achieve a faster breakeven, probably by the year 2003.

BMIL started operations in March, 1998, and had looked at the year 2005 to break even in the domestic market. Now, with plans to achieve it earlier, the company will actively consider brand acquisitions and is likely to strive for a deal in the next 12 m onths.

It was not known whether BMIL's acquisition plans will include the takeover of production facilities as well.

Sources told Business Line that ``the company is ready with a list of brands to be targeted for acquisition and has opened negotiations with a few liquor companies''. It is learnt that the company's acquisition strategy will focus on powerful brands in t he deluxe whisky segment, that is within a price index of Rs. 250-340.

The company has been eyeing brands of Indian liquor majors like Shaw Wallace, Herbertsons and Mohan Meakins for possible acquisition. BMIL, however, did not confirm or refute a specific query in this regard. ``The liquor industry here, at various stages, has buzzed with rumours that we were in talks with many companies,'' a BMIL official said.

But he confirmed that the company was interested in acquisitions ``if there is a strong IMFL brand thrown up for sale''. The official said BMIL's talks till now has not yielded anything concrete. ``Most of the domestic companies, including Shaw Wallace, are on a consolidation mode. So, where is the question of acquiring its brands,'' he said.

The company sources said Bacardi Martini has never shied away from investing to acquire brands in the global market. ``Whenever there's an opportunity to buy out a strong brand, we have always jumped at it,'' they said, citing the company's recent $2-bil lion deal involving White Label and Bombay Sapphire Gin.

BMIL also highlighted that Bacardi was now in the race to acquire Seagram company internationally.

The company, in the last 28 months, has made significant investments to develop markets for its two brands _ Bacardi Carta Blanca white rum and Bacardi Reserva aged brown rum.

The sources suggested that white rum's annual budget towards marketing and advertisement expenses was in the region of Rs. 13 crores.

BMIL's two brands currently sell about 80,000 cases annually. The company roughly holds 10 per cent share of the premium spirits market, pegged at 1.6 million cases annually.

The company sources admitted that ``brand portfolio expansion in the short run is imperative'', even though the two Bacardi brands have garnered reasonable visibility in the domestic market.

Meanwhile, BMIL will also strive to increase its business either through brand imports (after April, 2000, when QRs pertaining to liquor industry are lifted) or by producing more of the company's original labels locally.

Bacardi-Martini's acquisition strategy in India, industry experts said, has the potential to uncork a series of similar plans by the MNCs in the post-WTO phase. And this, they added, may not leave any Indian liquor company untouched.