United Spirits, the Indian arm of Diageo, is set to close its 160-year-old manufacturing facility in Hyderabad, Telangana, due to “evolving market dynamics and ageing infrastructure”. The facility, which contributes 1.5% to the company’s revenue, is expected to close by July 2025, subject to statutory approvals. The decision is part of a multi-year supply chain agility program approved by the board of directors in 2023.
The company has issued a statement addressing the closure, stating that the facility has been operational for approximately 160 years and plays a crucial role in the region’s industrial landscape. However, it has faced significant challenges, including evolving market dynamics and ageing infrastructure, which have led to a review of its business strategies. The company assures that it remains committed to the welfare of its workers and will provide wages during the transition period.
The decision comes as United Spirits experiences sales growth, with a 7.5% increase in sales revenue for the nine months ending December 2024, driven by the growth of its prestige-and-above segment, which rose by 8.8%. Diageo’s organic sales also rose by 1% for the last six months of 2024, with revenue in India increasing by 6%.
Diageo’s business in India has been boosted by the growth of its prestige-and-above segment, driven by brands such as McDowell’s, Signature, and Royal Challenge, as well as Scotch sales, led by Black & White. The company has also restarted its business in Andhra Pradesh after a five-year hiatus, following the state government’s introduction of a new excise policy.
Overall, the closure of the Hyderabad facility is part of United Spirits’ efforts to adapt to changing market conditions and focus on areas of strength, while also ensuring the well-being of its workers.