New Delhi: After establishing itself among the top three liquor companies by sales in India,Pernod Ricard SA, the owner of brands such as Chivas Regal,Ballantine’s and Absolut, aims to double its business in the country in the next four-five years, the French company’s chief executive Pierre Pringuet said. Achieving this target will be helped by the company’s growth in India, which ranked top in the world in its last fiscal year. In an interview, Pringuet spoke about the current and future strategy Pernod Ricard, the world’s second biggest distiller, has readied for India and how its focus on growing local brands. Edited excerpts:
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I had promised (the Indian team) to come over and celebrate the success of Pernod Ricard India. This fiscal year 2008-09 (July-June for the firm), India has been the fastest growing country for Pernod Ricard. Business is growing double-digit. Today, we sell about 14 million cases of Indian made foreign liquor and our ambition is to double this in the next four-five years; four rather than five.
Are you currently second in India? (Bigger rival United Spirits Ltd, controlled by billionaire businessman Vijay Mallya, sold 90 million cases in fiscal 2009.)
By volumes, yes. But since we sell in the mid-range to premium range, and not in entry segment, in value terms the gap may be smaller.
How are you going to double your sales volumes here?
India focus: Pringuet says the business model in India based on locally produced spirits and imported brands seems to be attractive Harekrishna Katragadda / Mint
First of all, we will continue doing the same sort of things that we have been doing here. It is a continuation of the current practices such as making products of superior quality and (running) an efficient supply chain.
As you know, India is quite a complex market. We have 18 different production sources and various warehouses. And, the duty system also makes it complex.
What have you invested in India and plan to in the future?
I cannot reveal the level of investment that we have made so far and plan to do in future, but I can tell you that it is well above millions of euros. I do not think that capital expenditure in building facilities is that significant. What is more important is to invest in people. Today we have about 1,000 people working with us, either in Pernod Ricard India or with distributors.
What is your business approach and go-to-market strategy in India?
The dual strategy of Pernod Ricard to have local brands and international brands is working well. Our strategy here reflects the global strategy. We believe that there is a huge potential in this market and today the country is already among the top five countries including the US, China, France and Spain.
How do your brands stack up here and elsewhere in the world?
Worldwide, we have 15 strategic brands. The top two are Chivas Regal and Absolut vodka. After them, I would say its Ballantine’s and Irish whiskey Jameson. When it comes to India, the stronger brands are Indian- made whiskies such as Royal Stag and Blenders Pride, followed by imported brands—Chivas Regal, Ballantine’s and, starting from a small base but very promising, Absolut.
Indian-made brands are more affordable and accessible; not so imported brands. The price of Chivas in India is twice the price of what it is in the US, Europe or China. And what is the reason for this? It’s because of the duties. Imported spirits are probably less affordable in India than anywhere else in the world.
You have been talking to the Central and state governments to rationalize taxes here. Any progress?
India should think about the position that you have in software and engineering today... The Nano car is almost a world success. When those products have access to all markets, we would like to have more access to (the Indian) market. I think it’s a win-win game at the end of the day.
How is your wine portfolio doing in India?
Pernod Ricard is the fourth largest company in wines worldwide. There is a growing interest in wines all over the world...not only in Western markets like the UK and the US but also in new markets such as China and India. We are adopting a dual strategy here. One which is based on the imported brands such as Jacob’s Creek, and (the second) on local production. About two years ago we started theNine Hillswine brand here which looks very promising. We hope that we will be able to double the volumes in the next four-five years. But that will also depend on the supply chain, which today is not optimum for wines.
Are you looking for acquisitions in India?
Well, nothing is happening today, let’s be clear. But that does not mean that we rule out any options as its always a question of opportunity. When we did the Seagram’s deal, nobody had anticipated that it (Seagram) would be for sale. It was known in June-July 2000 and the deal was done in December the same year.
How do you react to one of your bigger competitors (Diageo Plc.) talking for a significant minority stake in United Spirits?
I can’t comment on that either. The only comment I could make is that the business model that we have in India based on locally produced spirits and imported brands seems to be attractive.
How is the Vin and Spirit integration coming along? (Pernod Ricard concluded a $9.2 billion or about Rs45,000 crore acquisition of the company last year.)
There are two aspects in the integration. We have retained the basic organization and kept it as it is. The second is distribution of Absolut in our affiliates. That has been done for most of the countries in October 2008 and some countries in January this year.