United Spirits Ltd (UNSL), India’s largest liquor company and maker of brands such as McDowell’s and Black Dog, is expected to report a muted first-quarter performance as rising promotional spending, higher input costs and regulatory changes in Maharashtra continue to pressure its profitability.
Despite maintaining its leadership in the Indian alcoholic beverages market with a market capitalisation exceeding ₹1 lakh crore, analysts believe the company’s earnings will be impacted by a combination of increased advertising expenditure and state policy changes.
Higher promotional spending weighs on margins
United Spirits significantly increased its advertising and promotional (A&P) expenditure during FY26, spending ₹1,295 crore compared to ₹1,128 crore in the previous financial year. The company also allocates a larger share of its revenue to brand building than many of its competitors.
Brokerage firms expect this aggressive investment in marketing to affect profitability in the short term. Jefferies estimates the company’s EBITDA could decline by 2 per cent, while operating margins may contract to 16.8 per cent due to sustained promotional spending. Net profit, however, is projected to record a modest increase.
The relaunch of McDowell’s with refreshed packaging and a new marketing campaign formed a key part of the company’s premiumisation strategy aimed at attracting younger consumers.
Maharashtra policy adds fresh challenges
Analysts also point to higher packaging and glass costs, partly driven by global supply disruptions, along with changes in Maharashtra’s liquor policy.
Last year, the Maharashtra government increased excise duty on Indian-made foreign liquor (IMFL) by more than 50 per cent, resulting in a sharp rise in retail prices. The introduction of the Maharashtra Made Liquor (MML) category has further intensified competition by offering lower-priced locally manufactured spirits.
United Spirits has acknowledged Maharashtra as its most significant near-term challenge but believes the worst impact may already be behind it.
Premiumisation remains long-term strategy
Despite near-term pressure, the company continues to focus on expanding its premium portfolio, betting that consumers will increasingly shift towards higher-value brands.
Industry analysts believe premiumisation remains a structural growth trend in India’s alcoholic beverage market and could help offset regulatory challenges and inflationary pressures over the long term.
While margins may remain under pressure in the coming quarters, investors will closely watch whether United Spirits’ strategy delivers sustainable growth and stronger profitability in the years ahead.