Allied Blenders to Boost Margins by 300 Bps!
India’s third-largest IMFL player rolls out region-specific capital expenditures to enhance operational efficiency and drive margin expansion.
Summary:
Allied Blenders & Distillers (ABD) has announced targeted capital expenditure (capex) initiatives across three key regions in India. This initiative is expected to enhance margins by 200 to 300 basis points over the next few quarters. The company is optimizing logistics, enhancing manufacturing capabilities, and expanding its bottling network to improve cost efficiency and capture greater market share in the competitive Indian-Made Foreign Liquor (IMFL) space.
Strategic Capex to Drive Efficiency
Allied Blenders & Distillers (ABD), a prominent player in India’s fast-growing IMFL market, has unveiled a robust capital expenditure strategy spanning three major regions. This carefully planned initiative is designed to fortify its production and supply chain infrastructure. It is expected to improve its operating margins by an estimated 200 to 300 basis points (bps) over the medium term.
This announcement comes as the company actively works to regain its momentum in the competitive liquor space, which is dominated by larger rivals like United Spirits and Radico Khaitan. By directing capex investments strategically across high-consumption regions, ABD aims to achieve significant cost savings, reduce logistics burdens, and ensure better availability of its flagship brands.
Regional Capex Rollout: A Three-Pronged Strategy
ABD has identified three regions as pivotal to its next phase of growth—Northern India, Eastern India, and the Southern Belt. Each area will witness tailored capex deployment focused on specific operational needs:
Northern Region (Punjab, Haryana, UP):
ABD plans to set up advanced bottling lines and warehouses in Haryana and Punjab to serve the North Indian markets more effectively. The company hopes to eliminate the high freight costs of transporting goods from its central plants. The logistics rationalization will cut delivery times and improve fill rates across Tier-2 and Tier-3 cities. Eastern Region (West Bengal, Odisha, Jharkhand):
A greenfield plant is under development in West Bengal and is aimed at consolidating ABD’s presence in the high-demand East Indian market. This facility is expected to support the company’s growing volumes in the economy and semi-premium segments. With local production, the company will capitalize on state-specific regulatory advantages and gain access to excise approvals faster.
Southern Region (Karnataka, Tamil Nadu):
In the South, ABD is investing in upgrading its co-packing and third-party bottling partnerships. Modernizing existing units and quality control, automation will strengthen brand consistency and cost structures in states with intense competition and traditionally slimmer margins.
Margin Expansion Through Cost Optimization
By investing in localized manufacturing and streamlining its supply chain, ABD expects to unlock significant cost advantages. These include freight savings, reduced breakage losses, quicker turnaround times, and minimized inventory holding costs. These structural efficiencies are anticipated to be reflected in a 200–300 bps margin expansion in the upcoming fiscal periods.
Further, the capex will help mitigate the volatility caused by rising input costs—particularly glass bottles and ENA (extra neutral alcohol)—squeezing margins across the IMFL sector. With localized production, the company is better positioned to negotiate raw material procurement, improve throughput, and minimize wastage.
Positioning for Long-Term Growth
ABD’s management has emphasized that this capex initiative is aligned with its long-term vision of becoming the most cost-efficient IMFL player in India while maintaining quality standards. With over 60 million cases sold annually and brands like Officer’s Choice leading volumes, the company sees an opportunity to reclaim lost ground and expand its presence in premium and semi-premium segments.
The investments will also prepare the company for future market liberalizations and consumption growth, particularly in states where per capita liquor consumption is poised to rise due to demographic shifts and increasing disposable incomes.
Market Reactions & Industry Outlook
The announcement has been met with favorable reactions from investors and analysts. Several brokerage firms view this development as a step in the right direction, noting that margin recovery will be pivotal in improving ABD’s valuation ahead of its long-anticipated public listing. Moreover, with the Indian alcoholic beverages market expected to grow at a CAGR of over 6% till 2030, the timing of this capex plan aligns well with macro tailwinds.
Regulatory uncertainties, high taxation, and price controls remain challenging for the broader industry. However, companies like ABD are adapting by strengthening regional competitiveness and cost structures—critical strategies for sustainability in a highly fragmented and state-regulated market.
Conclusion
Allied Blenders & Distillers’ capex across three critical regions demonstrates a calculated approach to operational and financial optimization. The company is positioning itself to reap long-term benefits in a dynamic and competitive marketplace by tackling logistical bottlenecks, enhancing manufacturing efficiency, and building regional capacity. The anticipated 200–300 bps margin boost is a strong indicator of the potential impact of this strategy, signaling positive momentum for stakeholders.
The image added is for representation purposes only
