Pernod Ricard India Eyes Double-Digit Growth Rebound Next Fiscal

The Indian arm of French spirits company Pernod Ricard expects sales growth to rebound in the next financial year, underpinned by signs of domestic economic recovery and consumers' willingness to spend more on high-value products.

“Premiumisation is still extremely valid, and we will continue to build on this strategy as affluent consumers’ appetite for high-value brands grows,” the company’s Chief Executive Officer Jean Touboul told NDTV Profit in an interview. 

“This year, we have observed softer premiumisation among consumers and that has weighed a bit on our low double-digit growth algorithm,” he said. “But we see that [growth] coming back in fiscal 2025.”

The maker of Chivas Regal, Glenlivet and Absolut brands controls about a fourth of the country's $21.13 billion whiskey market, despite a negligible presence in the mass segment. It gets a significant chunk from premium and semi-premium brands. Its sales grew 4% in the first half of the ongoing fiscal, even without access to the key Delhi market, where its licence has been suspended. The company follows the July to June fiscal year.

Touboul expects sales growth to accelerate in the second half, projecting “high single-digit growth” for the current fiscal. In FY23, the company's revenue grew 10% to Rs 25,039 crore. Higher taxes and advertising spends, however, led to an 8% decline net profit over last year to Rs 1,340 crore.

"We are doing everything we can to get it [licence] back as soon as possible," the company’s management said in a post-earnings call. “We're maintaining leadership with our Indian whiskey brands. We're gaining share with the imported spirits. So, a lot of excitement."

Pernod Ricard counts India among its "must-win" markets along with China and the United States. India accounts for 11% of Pernod Ricard's global sales and nearly a third of its global volume.

Amid the Delhi licence stalemate, Pernod Ricard India Pvt. has signed an agreement with the Maharashtra government to build a malt spirit distillery in Nagpur, entailing an investment of up to 200 million euros, or approximately Rs 1,800 crore. This would be spent in phases over the next decade.

The new distillery will be one of the largest in the country, with a capacity to produce up to 60,000 litres of malt spirit a day. As part of its wider strategy to increase local sourcing, the spirits maker aims to eventually procure up to 50,000 tons of barley every year from farmers.

Currently, the company operates though its distillery in Nashik apart from 24 bottling facilities across the country.

Touboul expects India to outpace the U.S. market to become Pernod Ricard's largest market globally, driven by improving consumer sentiment and urbanisation, favourable demographics with about 25 million new legal drinking-age people entering the pool of consumers and rising per capita income. He, however, refrained from specifying any time frame.

Faced with cost pressures, Touboul said, “Prices are bound to rise further year-on-year as inflation remains high.”

Pernod Ricard has also uncorked its first-ever domestically produced single-malt whisky, Longitude 77, in Dubai, underscoring the growing global acclaim for high-quality Indian spirits.

"It will be available in 15 premium liquor stores to begin with," Touboul said. It further has plans to expand sales to the rest of the world.