United Spirits’ popular segment sales fall 22.7% as state policies squeeze margins

United Spirits reported in its quarterly results on Wednesday that the alco-bev giant faces increasing pressure in its popular liquor business due to changes in the tax regimes of states like Maharashtra and Karnataka.

The popular segment of the company witnessed a net sales value decline of 22.7% to Rs 181 crore in Q2 FY2027, owing to higher taxes on some liquor brands in Maharashtra and a change in the excise duty slab in Karnataka.

In Maharashtra, changes to the liquor taxation framework, including the introduction of Maharashtra Made Liquor (MML), have created additional competitive pressure for established brands.


The state has introduced a separate category for locally manufactured liquor while changing excise duties on Indian-made foreign liquor (IMFL). Certain IMFL products face higher duties, while MML products benefit from a lower duty rate.

This difference can give locally manufactured liquor a pricing advantage over competing brands.

Meanwhile, Karnataka’s changes to excise duty slabs have added another challenge. The state is restructuring its liquor taxation system, including a transition towards alcohol-content-based taxation and a reduction in the number of existing price-based duty slabs.

United Spirits said the changes to excise slabs had adversely affected realisations and growth in its popular segment.

"NSV for the Popular segment at INR 181 Cr., down 22.7% on a like-for-like basis. This was driven by MML impact in Maharashtra as well as recent policy changes in Karnataka, which have adversely impacted the realisations and growth in the segment owing to excise slab changes," the Diageo-owned company said in an exchange filing.

Despite all these challenges, the net sales value of United Spirits increased by 2.8% to Rs 3,258 crore for the quarter under review, with the help of its premium and luxury categories. The net sales value of the popular category decreased by 20.6% to Rs 354 crore for H1 FY2027, while that of the company increased by 4.2% to Rs 5,961 crore.

United Spirits’ premium and luxury portfolio has helped offset some of the weakness.

"Net sales value (NSV) at INR 5,961 Cr., up 4.2% YoY. Within the above 4.2% growth, Prestige & Above segment grew 7.8%. This was driven by the strong performance of Smirnoff local flavour innovation and the luxury portfolio partly offset by the regulatory headwinds in Maharashtra and disruption in the Exports business," the company said.

Its Prestige & Above segment grew 6.3% in the second quarter, supported by Smirnoff’s locally flavoured offerings, the relaunch of J&B Scotch and growth in its luxury portfolio.

For the first half of FY2027, the segment grew 7.8%, although regulatory headwinds in Maharashtra and disruptions in exports partly offset the gains.