New Delhi: The Indian arm of French liquor company Pernod Ricard has signed a memorandum of understanding with the Maharashtra government to set up a malt spirit distillery in Nagpur. It will invest up to €200 million ( ₹1,794 crore) for this over the next decade.
Once complete, the distillery in the industrial suburb of Butibori in Nagpur will be one of the largest in India, capable of producing up to 60,000 liters of malt spirit per day.
“For us, it is really the moment to reinforce that India is one of the main strategic markets for Pernod Ricard. We are the second largest market for Pernod Ricard by net sales and it is obviously very important for the group to succeed in India and fully benefit from the long-term potential of this market,” said Jean Touboul, CEO of Pernod Ricard India. interview with Mint. Pernod Ricard operates 24 facilities in India. Some of these are fully owned by the company, some are through joint ventures, and some are leased.
The investment will be deployed in phases over the long term, Touboul said. “We are talking about a decade for this investment to develop in phases,” he added. The distillery will take at least two and a half years to build.
The company has identified India as a priority market. In an interview with Mint in December, Touboul said Pernod Ricard is on track to triple its net sales in India over the next decade. In fiscal year 2023, India has surpassed China as the second largest market by net sales for the company, after the United States. Pernod Ricard India sells mass market brands such as Royal Stag, Blenders Pride and 100 Pipers, and premium brands such as Chivas Regal, Ballantine’s, Glenlivet and Jameson Irish Whisky.
Once complete, the new distillery will employ between 700 to 800 people, the company said, and will produce spirits such as Longitude 77, Royal Stag, Blenders Pride and 100 Pipers, among others. Pernod Ricard India aims to source up to 50,000 tonnes of barley per year from farmers for this.
India’s organized liquor industry is poised to record revenues of ₹4.45 lakh crore in FY24, according to a 2023 report by rating firm Crisil. Pernod Ricard India posted consolidated income from operations of ₹25,039 crore in FY23, up from ₹22,741 crore in FY22, according to data sourced by Tofler.
Earlier this month, the group reported earnings for the first half of its 2024 fiscal year, which runs from July to June. “In the first half of the fiscal year (July to December 2023), our net sales in India grew 4%. This was slower than in the previous fiscal because we had some unfavorable comparisons in the last year’s base, particularly in the Delhi business, and due to some path to market disruption. Most of these issues have been resolved. We are happy that despite this adverse context, we have been able to grow. We anticipate an acceleration in the second half of the year (January to June ),” he said.
He said the pace of upgrading in India’s liquor industry had slowed down last year but was now gaining momentum. High inflation and interest rate have squeezed disposable incomes, he added, affecting the sector in general.
Touboul, however, maintained a low-double-digit growth target for the company over the medium term. “In India, we should be able to grow annually in the low double digits. It will not be the case for this fiscal year (2024). We will have high single digit growth this year, but from next year we believe we can return to low double-digit growth,” he added.
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Published: 23 Feb 2024, 17:30 IST