Can premium products continue to keep Radico Khaitan stock in high spirits?
Subscribe to enjoy similar stories. Premiumisation — the strategy of driving growth by focusing on high-end products within an existing category — has gained momentum over the past few years across several consumer-facing sectors including automobiles, jewellery, and organised retail. At its core, this reflects a steady rise in per-capita income, which has increased discretionary spending.
As a result, consumers are increasingly moving towards more expensive products with stronger brand recall. While premium products can help companies achieve faster revenue growth, the greater benefit is seen in profitability. Higher realizations and better product mix boost companies' margins, leading to faster bottom-line growth than revenue growth.
This shift in consumption behaviour is also reshaping the Indian spirits industry. Premiumisation in this segment is supported by structural factors such as rising affluence, evolving consumer preferences, greater exposure to global drinking trends, and a gradual expansion in the legal drinking population. Together, these elements are nudging demand away from mass segments toward the prestige and above (P&A) category.
In fact, P&A is growing faster than the overall market and the mass category. Radico Khaitan has emerged as one of the first companies to move towards premium products. This repositioning is reflected in the nearly 600% rise in its stock price over the past five years.
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