United Spirits Completes ₹130 Crore Acquisition of NAO Spirits to Bolster Craft Gin Portfolio

United Spirits Limited (USL), the Indian arm of global beverage giant Diageo, has announced the full acquisition of NAO Spirits & Beverages Private Limited, the maker of premium Indian craft gin brands Greater Than and Hapusa. The enterprise value of the deal is set at ₹130 crore, with the transaction structured in two tranches. USL will initially increase its stake in NAO Spirits from 30% to 97.07% by June 27, 2025, and expects to acquire the remaining 3% by June 2026. On the NSE, the shares of United Spirits Ltd. are trading at ₹1459.00, marginally declining by 0.12%.

Deal Structure and Investment Rationale

The acquisition will be executed through a combination of share purchases from existing shareholders and fresh equity and compulsorily convertible preference share (CCPS) subscriptions. In the first tranche, USL will purchase 37,683 equity shares for ₹53.8 crore and subscribe to 31,820 fresh equity shares and 27,577 CCPS for ₹56 crore. The deal also includes an additional ₹20 crore investment approved for NAO Spirits’ operational expansion and working capital needs.

NAO Spirits, founded in 2017, has established itself as a leading player in India’s craft spirits segment. The company’s flagship brands, Greater Than (India’s first London Dry Gin) and Hapusa (a Himalayan craft gin featuring foraged juniper), have gained significant traction among premium consumers. In FY24, NAO Spirits reported a net turnover of ₹34.83 crore and a net worth of ₹18.21 crore.

Strategic Significance for United Spirits

The acquisition aligns with USL’s broader strategy to diversify and premiumise its alcohol portfolio. By integrating NAO Spirits into its Ventures investment arm, USL aims to leverage Diageo’s extensive distribution network, production capabilities, and brand-building expertise to scale NAO’s operations both domestically and internationally.

Market Reaction and Industry Context

Shares of United Spirits were in focus following the announcement, though the broader market reaction was muted, with USL shares closing marginally lower at ₹1,460.95 on the BSE. The acquisition reflects a broader trend among mainstream liquor companies to tap into the fast-growing craft spirits segment, either through acquisitions or by launching their own brands. Recent examples include Tilaknagar Industries’ stake purchase in Spaceman Spirits Lab and Allied Blenders and Distillers’ acquisition of Fullarton Distilleries’ brands.

NAO Spirits currently holds a 4.6% share of the Indian gin market and recently expanded into the rum category with the launch of ‘PIPA’, an aged, spiced Indian craft rum. The company’s focus on authenticity, quality, and innovation has resonated with affluent and upper-middle-class consumers, who are increasingly seeking premium, locally relevant products.

Growth Prospects and Competitive Landscape

The Indian craft spirits market is witnessing robust growth, driven by rising disposable incomes, changing consumer preferences, and a growing acceptance of innovative alcoholic beverages. NAO Spirits’ unique positioning, with products like Hapusa retailing for over ₹3,000, places it firmly in the premium segment.

USL’s acquisition is expected to accelerate NAO Spirits’ growth trajectory, enabling the brand to benefit from Diageo’s global reach and operational strengths. The deal also underscores USL’s commitment to staying at the forefront of evolving consumer trends and maintaining its leadership in the Indian spirits market.

Conclusion

The full acquisition of NAO Spirits by United Spirits marks a significant milestone in the evolution of India’s craft spirits industry. By integrating NAO’s innovative brands into its portfolio, USL is well-positioned to capitalise on the premiumisation trend and drive long-term growth. The transaction, valued at ₹130 crore, exemplifies the strategic importance of craft spirits in the broader alcoholic beverages landscape and signals USL’s intent to remain a dominant force in a rapidly changing market.

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