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Thursday, May 17, 2007

Vijay Mallya gets global acceptance, finally

In an interview to BBC in September 2005, UB Group Chairman Vijay Mallya had said, "I think that the poorest of the poor look up to wealthy and successful Indians with some degree of respect."

Respect in India is something that Mallya had already earned. He inherited his father's $100 million business in 1983, when he was just 27. At that time, many were sceptical, given Mallya's reputation as a playboy. However, in the ensuing two decades, he turned it into a multi-billion dollar enterprise.

The acquisition of Shaw Wallace in 2005, the second largest Indian liquor manufacturer at that time, made UB the dominant player in India with nearly 60 per cent share of the market.

Last year, Mallya formed United Spirits by combining McDowell & Co, Shaw Wallace & Co, Herbertsons and other liquor makers of the group.

The company, with 145 brands and 69 factories, became the world's third largest spirits company after Diageo and Pernod Ricard.

Yet, Mallya was not spoken of in the same breath as Ratan Tata, Mukesh Ambani and Kumarmangalam Birla, who had a far bigger presence overseas.

Wednesday's acquisition of Whyte & Mackay for $1.18 billion puts Mallya in this hallowed bracket and promises to enhance his position in the Forbes' list of billionaires, which placed him 746th in 2006.

More importantly, it gives Mallya what he had been missing all this while: global acceptance. The UB Group, which was founded by Scottish gentleman Thomas Leishman in 1915 and which first made an impact by manufacturing bulk beer for the British troops, has had its products panned overseas, most notably by Europe's Scotch Whisky Association, as not real whisky since it is distilled with molasses rather than malt.

On Wednesday, the same association said: "We look forward to working closely with Whyte & Mackay's new owners on matters of mutual interest to protect and promote Scotch whisky in India and other international markets to the benefit of all Scotch whisky distillers."

It seems Mallya knew the huge intangible gain that would accrue.

'As you know, Scotch whisky can only be produced in Scotland. The only missing link in our portfolio has been Scotch', he said in a statement on Wednesday.

The eponymous brand of Whyte & Mackay, founded by James Whyte and Charles Mackay on the docks of Glasgow in 1844, where they blended 35 selected malts to produce a 'special' whisky, holds around 3 per cent of the UK whisky market. The company also owns Dalmore Single Highland Malt, Jura Single Malt, Vladivar vodka and Glayva liqueur.

These will give Mallya the arsenal to take on the likes of Seagram and Bacardi overseas, mostly notably in the booming markets of Russia, for which UB has just formed a pact with Russian Standard, and China, where UB this month announced the launch of five of its brands.

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