French spirits giant Pernod Ricard’s Indian subsidiary has inked a groundbreaking memorandum of understanding with the Maharashtra government. The deal outlines plans for a state-of-the-art malt spirit distillery in Nagpur, cementing India’s status as a pivotal market for Pernod Ricard.

Takes Center Stage

Pernod Ricard’s CEO, Jean Touboul, emphasized the strategic importance of India, revealing that it stands as their second-largest market by net sales. The company’s commitment to the long-term potential of India’s market is underscored by a massive investment of up to €200 million (₹1,794 crore) over the next decade.

Brewing Success in Butibori

The distillery, situated in the industrial suburb of Butibori, Nagpur, is poised to become one of India’s largest, boasting a production capacity of 60,000 liters of malt spirit daily.

Pernod Ricard’s Vision for India

Touboul articulated the company’s vision for India, stating, “We are the second-largest market for Pernod Ricard by net sales, and it’s obviously very important for the group to succeed in India and to fully benefit from the long-term potential of this market.

Strategic Investment Deployment

The substantial investment will unfold in phases over the next ten years, reflecting Pernod Ricard’s commitment to India’s growth. The construction of the distillery itself is anticipated to take at least two and a half years.

Triumphant in FY23

In a landmark achievement, India surpassed China as Pernod Ricard’s second-largest market by net sales in the fiscal year 2023, positioning the nation as a key focus for the company.

Employment Boost and Product Portfolio

Upon completion, the distillery is set to employ 700 to 800 individuals, demonstrating Pernod Ricard’s commitment to fostering local employment. The facility will produce a variety of spirits, including notable brands such as Longitude 77, Royal Stag, Blenders Pride, and 100 Pipers.

Barley Procurement and Local Impact

Pernod Ricard India aims to procure up to 50,000 tons of barley annually from local farmers, fostering economic collaboration and sustainability.

Booming Liquor Industry in India

India’s organized liquor industry is projected to reach revenues of ₹4.45 lakh crore in FY24, as reported by Crisil in their 2023 analysis. Pernod Ricard India, reflecting this growth, posted consolidated revenue from operations of ₹25,039 crore in FY23.

Resilience Amidst Challenges

Despite challenges in the Delhi business and route-to-market disturbances in the first half of fiscal year 2024, Pernod Ricard India reported a 4% growth in net sales.

Premiumisation Resurgence

While premiumisation in India’s liquor industry experienced a slowdown due to economic factors, Touboul anticipates a resurgence. High inflation and interest rate hikes affected disposable incomes but are expected to ease, paving the way for renewed growth.

Optimistic Growth Outlook

Touboul remains optimistic, maintaining a low-double-digit growth target for the company over the medium term. He projects a return to low-double-digit growth from the next fiscal year, underscoring the company’s resilience in the dynamic Indian market.

FAQs

1. What is Pernod Ricard’s investment in the Nagpur distillery?
   • Pernod Ricard is investing up to €200 million (₹1,794 crore) over the next decade.
2. How long will it take to build the Nagpur distillery?
   • The distillery is expected to take at least two-and-a-half years to complete.
3. Which brands will the new distillery produce?
   • The distillery will produce spirits such as Longitude 77, Royal Stag, Blenders Pride, and 100 Pipers.
4. How many people will the distillery employ upon completion?
   • The distillery is set to employ between 700 to 800 people.
5. What is Pernod Ricard India’s revenue in FY23?
   • Pernod Ricard India reported consolidated revenue from operations of ₹25,039 crore in FY23.
6. What growth outlook does Pernod Ricard have for India in the medium term?
   • Pernod Ricard aims for low-double-digit growth, expecting a return to this trajectory from the next fiscal year.

Pernod Ricard’s strategic alliance with the Maharashtra government marks a significant leap towards establishing India as a cornerstone in its global market. The investment in the Nagpur distillery not only reflects economic prowess but also highlights Pernod Ricard’s dedication to fostering local employment and contributing to India’s thriving spirits industry. As the distillery takes shape, it stands as a testament to the enduring partnership between Pernod Ricard and the dynamic Indian market.