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‘Consumers are opting for a drink better, drink less culture globally’

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India is the second-largest spirits market and the largest market globally for whisky, but the country has also seen a very low penetration level, according to Rajesh Mishra, COO, Pernod Ricard India. Mishra tells FE he is optimistic about the company’s India journey as premiumisation has become a trend as part of in-home consumption after the lockdown. The company follows a July-June annual accounting year and is listed on Euronext Paris. Edited excerpts.

How was your performance in the last fiscal and what’s the outlook for the future?

Despite the volatile environment amidst the pandemic, we witnessed a strong move towards premiumisation of consumption as hometainment gathered momentum and became a new trend, creating new constructs and opportunities for both purchase and consumption. Also, in recent years, alcohol consumption has seen increased ‘normalisation’. This led to the rise of experimentation, leading to greater momentum as consumers expanded their repertoire and sought newer experiences in food and drinks alike. Further, it enabled us to achieve >30% growth in our premium BIO (bottled in origin) portfolio, high teen double-digit growth in Scotch, and double-digit to high single-digit growth in the BII (bottled in India) whisky segment for July-June 2021.

Our nine months ended March 31, 2022, were very strong. Sales have maintained a strong growth of +19%, backed by a robust economic recovery. In the last quarter, we expect to register our best-ever growth in the premium BIO and BII portfolios.

Average per capita consumption in India is significantly lower than the rest of the world. What’s your experience?
India is the second-largest spirits market and the largest market globally for whisky. However, we see a distinct lack of penetration, with only 17% of the population imbibing as opposed to 23% in China, and the global average of 20%. India’s total volume consumed is even lower than the UK.

Did the pandemic help in speeding up premiumisation?

During the lockdown, premiumisation became a trend as in-home consumption surged, boosting the sales of our premium products. Besides, consumers were willing to experiment for a quality experience at home with the DIY trend picking up, manifesting a rise in cocktail culture. The new hometainment trend has also seen a burgeoning rise of smaller occasions. The premiumisation trend is anticipated to gain momentum as per capita income surges to 2.5x by the next decade. This ties in well with the wellness trend that is on the rise globally, with consumers opting for a ‘drink better, drink less’ culture. To stay on top of these emerging trends, Pernod Ricard India continuously innovates and responds with agility to have products in its portfolio tailored for every convivial consumption occasion and for every consumer segment.

Many liquor makers are trying their luck with ready-to-drink beverages. Can we expect exciting launches in India?

The ready-to-drink trend is showing early promise in the global markets, and we are witnessing some early shifts in consumer behaviour in India. Today, consumers are more experimentative and willing to try differentiated and unique offerings that set them apart. The ready-to-drink market is a small category in India, with ~3.3M cases of the overall ~220M cases of western-style spirit market, and more than 50% of the volume coming from flavoured spirit. At this stage of segment evolution, it is primarily rum based (~81% of segment). However, interesting trends are emerging in cocktail premixes/spritzer/high ABV wines/hard seltzer and kombucha, among others. In our global portfolio, we have some offerings to provide a premium experience in some of these emerging spaces. We are closely watching this space to identify opportunities with value-creation potential.

Any plans on the acquisition route to accelerate growth and portfolio?

India continues to remain a strategic market for Pernod Ricard, and we are committed to nurturing and growing the ecosystem, aligned to our ethos of conviviality without excess. Conviviality Ventures, the group’s investment arm,
invests in and mentors smaller companies, startups, adjacent businesses, and entrepreneurs. We intend to invest up to a €100 million across various markets, including India. We are continuously looking for opportunities and have always been open to both the organic/ inorganic route to expand our product portfolio to meet ever-evolving consumer needs.

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