Bengaluru: French distiller Pernod Ricard SA has managed to clock annual sales growth exceeding 10% nearly every year for the past five years in India. That’s in stark contrast to the wider liquor market, which has not yet been able to shake off more than six years of consistently sluggish sales.
The driving force behind Pernod’s market share wins is its relentless, single-minded focus on the whisky portfolio that it bagged when it bought Seagram’s India business in 2001. More than 90% of the company’s volume sales in India come from its Seagram’s brands—Imperial Blue, Royal Stag and Blender’s Pride—Pernod’s India head Guillaume Girard-Reydet said in an interview.
Of the three, Imperial Blue is Pernod’s largest selling brand in India at over 20 million cases (each containing 9 litres) annually. Royal Stag is a close second at around 19 million cases, but it tops in terms of profit margins and value. Blender’s Pride is the smallest of the lot at around 6 million cases.
“In India local brands (Seagram’s for Pernod) is the right way to scale up. Bringing foreign brands will always be time-taking and niche. Pernod rightfully cultivated and tapped Seagram’s in terms of marketing, innovation, distribution, retail placements and advertising, and reach," said Abneesh Roy, senior vice-president at Edelweiss Securities.
All three Seagram’s brands have averaged growth in either the high single-digits or low double-digits annually over the past three years - barring the one year after the Supreme Court’s highway ban came into effect. A concerted effort to rope in relevant and influential brand ambassadors, focused activation platforms like fashion tours, promoting the Seagram’s quality seal at retail outlets, and associations with mega music concerts have helped.
“Consumer confidence in Seagram’s quality remains very high. We also try to present our brands in a way that truly connects with the consumer, which is the second reason behind our success in India. The last, I would say, is the quality of the team because if a company is successful it is because of the brands and the commitment of the team," Girard-Reydet said.
On average, Pernod’s revenue grew by more than 12% over the past five financial years (July-June calendar). It even managed to eke out growth of 1% during 2016-17, when the alcobev industry was hit by the apex court’s decision to ban all alcohol sales near highways, causing many bars, pubs, restaurants and retail outlets to shut.
Diageo Plc-run United Spirits Ltd (USL), Pernod’s largest rival in India, has grown sales in the high single-digits on average over the past five financial years. However, its overall sales growth (at 8.3%) outdid Pernod’s in 2016-17.
But since USL follows an April-March calendar, a comparison of the two companies’ numbers cannot be done on a like-for-like basis. Pernod also sells premium brands in India, whereas USL sells value or economy labels too. And it is only over the last two-three years that USL has pivoted to focus on premium brands.
“Diageo-USL has done a lot of good in the last two years in terms of relaunching brands and giving advertising support but Pernod is very aggressive there, and things are quite tough from a market share gain perspective. In the last one year, Pernod and USL have grown at similar rates in the premium segment but ideally USL should have grown faster. They’re coming off a more favourable base over the last 6-7 years, they have a lower market share in the premium segment, and globally they are much bigger than Pernod," Edelweiss’ Roy said.