New Delhi India’s Chief Operating Officer (COO) Rajesh Mishra said in an interview that amid media reports that French spirits group Pernod Ricard has decided to temporarily freeze fresh investments following tax disputes over wine import valuations, India Market continues to be a priority for the company.
Last week, Reuters reported that legal conflicts over the years have made it difficult for the company to do business in India.
The differences between the company and the government are over the methodology used to calculate customs duty on imported liquor.
“This is primarily an issue on the valuation principle and we are in constant dialogue with the authorities to arrive at an acceptable solution. The issue is not new; This has been going on for about 25 years. The government has cooperated a lot. We are the largest taxpayer in the industry. We may be part of a French conglomerate but we are very much an Indian company,” said Mishra. That doesn’t mean we are back on business here.
Pernod Ricard sells Blenders Pride, Royal Stag, Chivas Regal, The Glenlivet and Absolut Vodkas in India.
Mishra said that the company will invest 400 crore in a joint venture with a local firm to set up a plant in Kanpur, Uttar Pradesh. He said that it will be made operational in a few months. Its capital expenditure for the Indian market is 200-300 crores on an annual basis. It’s also investing around 80 crore to set up another plant in Odisha in partnership. The plants will operate on a profit-sharing basis with the local owners.
Pernod Ricard India will focus on premiumization of alcohol categories like gin and craft liquor and is trying to bring them into the country. “India is a ‘structured’ premiumization story. The kind and quality of growth we are seeing is different from what we have seen before and it is happening differently for different categories.”
During the pandemic, the ‘value’ liquor segment saw the lowest single-digit growth, but the growth rate for premium categories such as Deluxe, Premium and Scotch rose. Blenders Pride and Seagram’s rose nearly 20%, while Scotch Whiskey saw a 30% increase. Mishra said that single malt saw an increase of 50% to 100%.
While the company focuses on the whiskey segment, it last month launched Havana Club 7, a super-premium rum. It will also receive craft liquor and gin as well as ready-to-drink alcohol.
“The ready-to-drink segment in India is expected to grow in the next 5-10 years and we will evaluate the opportunities in these segments,” Mishra said.
Globally, the company’s brands include Italian-made Malfi and Germany’s Monkey 47, which is present in India. In the bottle-in-origin segment, 15-20% of sales come from its Absolute Vodka, and wine has the same percentage. Scottish whiskey makes up for the remaining sales. Overall, 90% of the business comes from whiskey sales, including whiskey made in India.
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