Consumers may have the option of picking from two Mansion House brandy products in future. The never-ending battle between Netherlands-based Herman Jansen, owner of Mansion House brand of brandy, and Mumbai-based Tilaknagar Industries (TI), manufacturer of Mansion House in India, have seen the entry of another player -Allied Blenders & Distillers (ABD) as a co-plaintiff in the legal dispute. Besides TI, ABD also will start marketing of Mansion House brands in India soon.
Last week, Kishore Chhabria-owned ABD purchased 50 per cent ownership rights for Mansion House and Savoy Club brand in India from Herman. Under the agreement, ABD will produce and market Mansion House brandy in India. Mansion House and Savoy Club, the brands which are under dispute, are made in India by TI, though the agreement was terminated by Herman.
The Bombay High Court, however, had rejected Herman’s and ruled in favour of TI in December 2011. Herman appealed against the order and a final verdict is due.
However, TI says it has no plans to give up the brand as Mansion House sales account for more than a quarter of its Rs 806-crore revenue in 2013-14. Needless to say, Mansion House has a 35 per cent share of India’s semi-premium brandy market. Out of TI’s 16.13 million cases annual sales, 8.8-million cases were of brandy, backed by sales of Mansion House which comes to about 3.8 million cases.
Santosh Kanekar, former marketing head at Diageo India and an independent consultant, says, “Obviously the loss of Mansion House would mean a substantial loss of market access for TI and hence it will not let it go. The brand plays at the higher end of the brandy market and obviously, it makes sense for ABD to move from lower margin brands to higher margin play which would build a profit powerhouse – a strategy which Pernod Ricard patented in this market.”
An interesting twist to the story is that ABD is reportedly in discussions to buy TI.
Kishore Chhabria has a history of winning a similar case against his bete noire – Vijay Mallya, over ownership of the Officer’s Choice whisky brand, the largest selling whisky brand in the world. The dispute took place more than a decade ago and involved Kishore Chhabria and elder brother Manu who sold his company Shaw Wallace to Vijay Mallya in 2005. Later, Manu Chhabria claimed ownership of BDA and its brand – Officer’s Choice whisky. The dispute reached the Calcutta
High Court, which ruled against Mallya in 2012. Officer’s Choice sells more than 20 million cases.
ABD, the third largest player in the 304-million-cases Indian Made Foreign Liquor (IMFL) market, is keen to corner a major share of the fast growing brandy market in India. The four southern states account for 98 per cent of brandy sales in India. With a 50 per cent brand ownership of Mansion House, ABD plans to consolidate its market share. Currently, ABD has a small presence in the brandy market with its premium Kyron and semi-premium Lord & Master brandies.
According to Deepak Roy, executive vice-chairman and chief executive of ABD, brandy sales currently constitute 25 per cent of the overall IMFL market. However, for ABD, whisky will always be the preferred category. “Though we will grow fast in brandy category, it won’t cross 25 per cent of our overall sales,” Roy says.
However, TI believes the agreement signed between ABD and Herman is illegal. Amit Dahanukar, chairman, TI, says aid, “The assignment of the trademarks (Mansion House and Savoy Club) during pendency of judicial proceedings is illegal. Neither the assignors (Herman) nor the assignee (ABD) are entitled to use the trademarks Mansion House and Savoy Club as such use would tantamount to violation of TI’s rights , which have been upheld by the Bombay High Court”.
In 1987, TI had entered an agreement with UTO (Herman Jansen Beverages) by which UTO had ceded ownership rights of the Mansion House and Savoy Club trademarks to TI. Later, Herman accused TI of breaching the terms of the agreement and sued it in Indian courts.
According to experts, picking up brands would be the easiest way to crack the market than making costly acquisitions. “The liquor industry in the nineties and till mid- 2000 was built on acquisitions and was often acrimonious. What is interesting is unlike in the past where the entire company was gobbled up, the strategy now is to select brands which will build a complimentary portfolio. This is a bit like moving from investing in the index to stock picking,” Kanekar says.
Out of the 304 million cases IMFL market, brandy is at the second position with 76 million cases, whisky at the top with 172 million, while rum is in the third position with 45 million cases.