Premiumisation in Indian spirits accelerating with income growth: Pernod

The premiumisation of the liquor industry is happening very fast, helped by trends such as growth in disposable income and young generation's aspirations to have a more elevated experience, French spirit maker Pernod Ricard India MD Jean Touboul said on Friday.

 

The mass spirits market will continue to be there, however, it is also premiumising as people now aspire for better products as they prefer "to drink less probably but drink better stuff", Touboul said while speaking at a session during India Today Conclave here "This trend is growing in the younger generation, which means when they grow older when their disposable income grows with life, we should see this trend continuing, if not accelerating," he said.

 

Touboul also mentioned the role of innovation and said it is very important and key for Pernod Ricard's business because if you want to interact with the consumer to evolve them, then products delivering higher value are needed.

 

Pernod Ricard, which has launched its first Indian single malt whisky 'Longitude 77', said the elevation in the local whisky market will be through "innovation with premiumisation towards luxury”.

 

When asked about policy-level challenges faced in India, Touboul said the alcobev market is regulated all over the world.

 

"So we do not complain, and we acknowledge alcohol is not neutral, and we accept this regulation and the taxation that goes with it. Fair to say that India is complex, and this regulation, which is different in the different states, does create some difficulties," he said.

 

However, Touboul acknowledged the situation is "improving year after year".

 

"So I am really looking at this increasing ease of doing business, which is the right path. Of course, I would like to go even faster, but it's going in the right direction," he added.

 

With sales of Rs 26,773 crore in FY24, Pernod Ricard is the largest Indian spirit maker.

 

Pernod Ricard India (PRI), a step-down unit of French spirits maker, owns popular international brands, such as Absolut, Chivas Regal, and Glenlivet, is a fully owned subsidiary of Pernod Ricard South Asia, which contributes to over 20 per cent of its net sales.

 

Besides, it owns an IMFL (Indian-made foreign liquor) portfolio as Royal Stag, Blenders Pride and Imperial Blue. These Seagram's whiskies contribute to more than 80 per cent of PRI sales.

 

PRI's overall net sales CAGR (compound annual growth rate) has been 8 per cent for the last 5 years. International brands have grown much faster than this average, with strong double digits, reflecting the premiumisation trend in the Indian alcobev market.

 

Pernod Ricard entered the Indian market around three decades back and is a market leader now.

 

We became the leader of the market after 30 years of local presence. So three decades is a long time, and premiumisation, moving towards luxury, is the journey. It's a journey that started then, and there is still a bit of a mass market in India, but it is premiumising fast.

 

" When asked whether Pernod Ricard will plan to expand in the mass market, Touboul replied: "We are a premium spirit company. So the mass market, some other people do it very well, and it's not really our business.

 

We prefer to attract consumers and bring them up and we are a local company, and I think there is more and more demand for local spirits."

 

Referring to the Indian Single malt segment, which added several homegrown alcobev companies in the last 4-5 years and some of them won global awards as well, Touboul said nowadays, there are plenty of good products in the market, and that's the way forward for the market.