Alexandre Ricard: Alcohol market will be led by India, China: Pernod chief Alexandre Ricard

Alexandre Ricard: Alcohol market will be led by India, China: Pernod chief Alexandre Ricard

Pernod Ricard chairman Alexandre Ricard said most of the alcoholic beverages industry growth in the next decade will be driven by India and China, where the world’s second-biggest spirits group commands a strong leadership position.

In India, the maker of Absolut vodka and Chivas Regal scotch, sold spirits worth 4.1 billion euros in 2021, expanding sales by 25% over a year ago.

“We have roughly 45% of the market in which we operate in India. The legal drinking age population is growing on average by 20 million people a year with good GDP growth and strong urbanisation rates, which is the perfect cocktail for our spirits category,” Ricard told investors at the Capital Market Day.

While India has a population of nearly 1.4 billion, the drinking population is smaller and about half can afford only very cheap unbranded liquor. The rapidly growing middle class, which can afford premium-and-above is about 150 million.

Pernod Ricard gets a significant chunk from premium and semi-premium brands, mainly Blenders Pride, Royal Stag and Imperial Blue. The French company controls about a fourth of the overall whiskey market in India despite hardly any presence in the mass segment. The company said it has reached an inflection point in India with sales of international brands growing 58% while Seagram’s whisky portfolio expanded 22% year-on-year.

“International brands business growth is booming in India, on the penetration and the rising young middle-class affluent consumers. The kind of growth that India is seeing for international brands, it has never been seen before,” said Rajesh Mishra, chief operating officer, Pernod Ricard India.

In 2021, sales of beer and spirits such as whisky, vodka and gin expanded 17-18% by volume, the fastest expansion in more than a decade due to a low base and increased in-home consumption, according to the latest data by IWSR Drinks Market Analysis.

The liquor segment in the country is highly regulated, with the government controlling pricing, retail, as well as distribution in several states. Over the past few years, the market has also been adversely impacted by new laws, including highway bans, demonetisation and increased taxation.

The company, however, said there is a forward-looking approach now and the government is trying to create an ecosystem that eases business in a big way, helping accelerate business. “On the regulatory side, some challenges do still remain there, but you cannot compare the past challenges with future ones expected in India. The government is extremely positive to create a business environment where business flourishes,” said Mishra.

Most companies, including Pernod Ricard’s biggest rival, Diageo, want to sell less but more premium products in India, triggering newer competition in the pricier segment. For instance, Diageo has shifted focus to its prestige and above business that will account for over 84% of its overall sales, up from 45-50% five years ago after it agreed to sell more than 32 mass brands last month.

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