Pernod Ricard not scaling back India business, says COO

Last week, Reuters reported it had become tough for the company to do business in India due to the legal tussles over the years.

The difference in opinion between the company and the government is on the methodology used to calculate customs duty on imported alcohol.

“It is primarily an issue on the valuation principle and we are in a continuous dialogue with the authorities to arrive at an acceptable solution. The issue isn’t new; it’s been on for about 25 years. The government has been very supportive. We are the highest tax payers in the industry. We may be part of a French group but we are very much an Indian company," Mishra said. “It doesn’t mean we are scaling back on business here."

Pernod Ricard sells Blenders Pride, Royal Stag, Chivas Regal, The Glenlivet and Absolut vodka in India.

Mishra said the company has commissioned and invested ₹400 crore in a joint venture with a local firm to set up a plant in Kanpur, Uttar Pradesh. It will be commissioned in a few months, he added. Its capital expenditure for the Indian market is ₹200-300 crore on an annualized basis. It is also investing around ₹80 crore to set up another plant in Odisha in a partnership. The plants will operate on a profit-sharing basis with the local owners.

Pernod Ricard India will focus on the premiumization of alcohol categories such as gin and craft liquor and is looking to bring them to the country. “India is a ‘structured’ premiumization story. The kind of and the quality of growth we are seeing, is unlike anything we have seen before and it’s happening differently for different categories," he said.

During the pandemic, the ‘value’ liquor segment witnessed the lowest single-digit growth, but growth rates rose for premium categories like deluxe, premium and scotch. Blenders Pride and Seagram’s grew about 20%, while scotch whiskies saw 30% growth. Single malt saw between 50% and 170% growth, Mishra said.

While the company focuses on the whisky segment, it launched Havana Club 7, a super-premium rum last month. It will also get into craft liquor and gin, as well as ready-to-drink alcohols.

“The ready-to-drink segment in India is expected to grow over the next 5-10 years and we will evaluate opportunities in these segments," Mishra said.

Globally, the company’s gin brands include Italian made Malfy and Germany’s Monkey 47, which is present in India. In the bottle-in-origin segment, 15-20% sales are made up of its Absolut vodka, and wines account for a similar percentage. Whiskies from Scotland make up for the remaining sales. Overall, 99% of business comes from whisky sales, including the ones made in India.