![#](https://e-malt.com/Images/left_top_corner16x200.gif) | E-Malt.com News article: India: Pernod Ricard looking to triple its net sales in Inda
Pernod Ricard, the world’s second-largest spirits company, is looking to triple its net sales in India over the coming decade as consumers shift from country liquor to its brand of whiskies, and as greater premiumisation drives demand for its imported scotch, its chief executive for India Jean Touboul said.
“India is one of the key markets for Pernod Ricard Group, actually the second by net sales. That’s already critical because of the size and growth profile of the market. There are a lot of tailwinds, from macro-economic factors to the country’s demographics. We need to deliver low-double-digit growth on net sales annually, which is consistent with our vision to triple net sales in India in the coming decade," Touboul was quoted as saying by the Mint on December 13. Pernod Ricard India sells brands such as Royal Stag, Blenders Pride and 100 Pipers, apart from premium international brands such as Chivas Regal, Ballantine’s, Glenlivet and Jameson Irish Whiskey, among others. In India it competes with Diageo, the world's largest spirits company. In fiscal year 2023, India surpassed China to become the second-largest market by net sales for the French spirits company. The United States is its largest market. India is also among the world’s largest consumers of whiskey, with a young population and millions of new drinking-age consumers entering the fold annually. Liquor companies are thus primed to grow their businesses and investments here. “That's how important the market is for us. It means that one day, probably, India will be the first market for Pernod Ricard. That's the natural direction, given the strong tailwinds, the emerging affluent population, and the premiumisation that is going on here," he added. Growth will be led by brands and spirits across the board, he said. “Premiumisation actually happens at every level. When you have a consumer shifting from cheap country liquor to our Imperial Blue brand, we start trading the consumer up to our core of our brands such as Royal Stag and Blenders Pride. That’s where most of the premiumization happens," Touboul said. “Then of course we have the high-end part of the portfolio – imported products such as Ballantine’s and Chivas. While they are a small part of the business because of high taxes and price points, the growth rate is significant, and higher than that of the local portfolio." India is also in the midst of negotiating a free-trade agreement with the United Kingdom, which is seeking a significant cut in import duties on goods such as Scotch whiskey. India imposes tariffs as high as 150% to discourage the import of alcoholic beverages. If reduced, the move could result in greater demand for Scotch whiskey.
“First, there needs to be a FTA. If it happens, what are the thresholds that will determine the taxes? That is still not determined. While our development can be bright without an FTA, it will be even better with one. That would be a win-win because taxes paid will remain significant due to the increase in the volume of Scotch sold. That would create jobs and benefit the economy, and make exports possible," he said.
Meanwhile, Touboul said the company continues to invest ₹300 crore a year in the market to upgrade plants and to expand capacity in line with demand. “We also have long-term forecast plans to determine future needs that align with the ambition to triple our net sales," he said. In its fiscal year 2023 (which ends on 30 June), the company reported a 13% jump in sales in India, with strong momentum from the Scotch portfolio, Jameson and Absolut, according to parent company Pernod Ricard’s annual report for the year.
Its key brand Blenders Pride sold nine million cases during the year, while 100 Pipers scotch sold 1.5 million cases, it said in the report. Ballantine’s and Chivas achieved sales of 0.6 million and 0.3 million cases, respectively. The company’s new distillery and bottling plant in Kanpur also commenced operations during the fiscal year.
Royal Stag and Blenders Pride are the company’s biggest brands in India. Its local whiskey brands account for 80% of the company’s net sales in the market.
Touboul said the company was also looking at investing in local companies but no deals were currently on the table. “We regularly look at brands that we can acquire. No decision has been made and no fitting opportunity has been identified. But it remains on the table," he said. The company also faces regulatory headwinds in India, with the country's competition watchdog investigating how it boosted its market share in south India, according to Reuters. While Touboul did not comment on the probe specifically, he said, "It's a constant discussion. We are always in touch with the authorities to try and improve ways of doing business."
14 December, 2023
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