Thibault Cuny took over as MD and CEO South Asia of the euro 8.8 billion French alcobev major, Pernod Ricard, in 2019. It’s his second stint in India and India, he says, has been a pleasant surprise for him compared to what it was when he was here between 2006 and 2009. “The society is more open to alcohol consumption outside of their homes. There are far more pubs and restaurants now and Indians are willing to go out and have fun. The best trend is premiumization which is very good for our products,” he says.

Pernod Ricard is a market leader in premium alcoholic beverages with an over 40% market share (with brands such as Seagram’s Royal Stag, Seagram’s Blenders Pride and Seagram’s 100 Piper, which are bottled in India, while the likes of Chivas Regal and Ballentine are imported). Competitor Diageo India which inherited a host of popular brands by virtue of its acquisition of United Spirits (USL) has also been aggressively stepping up its premium play.

“Our objective is not to get people to consume more, our objective is to get people to consume better and more responsibly. We will continue to focus less on volume and more on value,” says Cuny. And, this approach coupled with the growing appetite of Indian consumers to consume differentiated products has led the company to chart its next level of growth. “Consumers are expecting different offerings and this is the best time to bring new products. We want to expand palettes and experiences. We will launch flavoured whiskies, ready-to-drink beverages and much more.”

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Cuny says that the company will first launch ready-to-drink beverages from its global portfolio and eventually manufacture under its IMFL brands too. “Beverages such as Jameson Ginger & Ale, Absolut ready-to-drink cocktails and some of the beverages under the Ballentine brand are extremely popular across the world. We will get some of them to India first.” The ready-to-drink beverages have a lower alcohol content (in the region of 4%-9%) and Cuny believes that they would be a perfect fit in the fast-growing cocktail culture in India.

Pernod Ricard entered India over 20 years ago in the midst of most complicated regulatory conditions. Every state had a different law for alcobev consumption and there were myriad governance and compliance issues that riddled the industry. Though the regulatory environment remains pretty much the same, with state governments controlling liquor sales and distribution in 70% of the states and an alcoholic beverage company requiring almost 2,00,000 permissions annually to manufacture brands in India, the French major has stayed the course by focusing on premiumisation. Taxation and duties (which vary in every state) is on an average between 50% and 60% so, playing in the premium segment made better sense as it gave the company a fair degree of pricing power.

“Pernod Ricard has been consistent in the premium space. They have rarely hesitated from taking price increases and that has worked for them,” points out a former USL veteran. All the three Pernod Ricard brands are manufactured in India and Cuny says that the plan is to take them to other countries.

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The French alcohol major is also looking at launching variants targeted at women consumers. “There is a strong trend of openness among women towards alcoholic beverages and we see that as an important pillar of our growth. Women prefer less strong drinks, sweeter and softer whiskies. Jameson for instance is suited for women, it is sweeter and easier to drink. We have Jameson Ginger & Ale, Jameson & Apple and plenty of drinks that we can leverage with Indian women.”

The former USL executive, however, wonders if ready-to-drink could impact Pernod Ricard’s profitability. “Ready-to-drink beverages will have lower alcohol content, but the company would have to pay the same amount of taxes as that of regular whisky. Also, most of their RTD beverages come in 250 ml cans while their smallest whisky pack is a 180 ml bottle and one can make 3 pegs out of it. In a value conscious country like India, I am not sure if RTD will give them the desired scale.” Gross margins of an alcohol company thanks to the steep taxes are in the region of 30% and operating margins are around 13-14%. On the contrary, operating margins of most FMCG companies are in the region of 20%, while gross margins are upwards of 45%.

Cuny believes that India is full of opportunities. A Blender’s Pride fan, he says that one could make fantastic cocktail mixes and ready-to-drink beverages with Blender’s Pride too. Locally produced RTD beverages would surely help the company to price its products more competitively and build scale. India is Pernod Ricard’s largest market by volume and third biggest contributor to sales and profits globally.

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