With the viability of popular liquor brands slowly shrinking because of increasing input costs, premiumisation is the way forward for major companies. In an interview with BusinessLine, Pernod Ricard India’s Chief Operating Officer Rajesh Mishra says that being a value player in the industry helped the company to sustain its operations during the pandemic. Excerpts from the interview:
1) Post-Covid, what is the outlook for Pernod Ricard India?
We believe 2022 will be a year of a positive outlook. In our nine month performance (ending March 2022), we have posted double-digit growth with a significant premiumisation trend.
Our premium and premium plus segments have registered a strong growth of +20 per cent, with our imported brands (BIO) portfolio growing more than 60 per cent. We expect a strong year ahead as the premiumisation trend continues to gain momentum on the back of the resurgent economy.
Social drinking has shifted from bars and pubs to homes, ushering in the desire to create unique experiences for guests and ourselves alike. It has also seen the Indian consumer experimenting with new, premium, and amazing spirits.
In addition, the uptick in the Indian economy combined with a strong propensity towards drinking less but better leads us to believe that FY23 will also be another positive year for both our IMFL (Indian Made Foreign Liquor/BII) and imported brands portfolio, which are well-positioned towards the premium end of their segments, in keeping with our long-standing focus on premiumisation.
2) Value-wise, you are ahead of the pack. What challenges did you face during the pandemic, and how do you plan to sustain your position in the domestic industry?
Operating in the ‘value’ segment rather than the ‘volume’ has been at the core of our business strategy. This strategy has provided anti-fragility in a challenging environment during the pandemic and in the current inflationary environment, helping reshape the Indian alco-bev business model.
From the geographical perspective, we are present across the country; however, with the rapid emergence of boomtowns, it is time to penetrate deeper across tiers and consumer cohorts. We strive to provide our consumers with unique offerings.
3) How has premiumisation panned out post-pandemic?
The premiumisation trend became visibly firmer during the pandemic. It continued to gain momentum post the lockdown and easing of government norms.
The trend saw consumers moving towards better, premium quality, unique experiences over the third-place (OTTP) at home. This at-home OTTP culture can potentially transform India’s drinking landscape completely. Post-pandemic, the premium portfolio is witnessing a dream growth.
4) Which areas of growth do you see going forward?
Our selection of BIO spirits has experienced robust growth. In addition, with the wellness trend on the rise globally, consumers are opting for the “drink better, drink less” culture.
Pernod Ricard India is continuously innovating to respond with agility to these emerging trends. As a result, our premium portfolio of BIO & BII is designed to offer a bespoke consumer experience. The ready-to-drink (RTD)/low alcohol/no alcohol trend demonstrates excellent early promise in the global markets.
The wine revolution in India has been waiting for too long. White spirits and the crafts space are also showing promise. Though India is still predominantly a brown spirit market, it will make a decisive shift to other categories that are relatively nascent. This penchant for unique drinking experiences and rising income levels will ensure that premium and super-premium categories continue to grow.
5) Which emerging trends in the alco-bev market do you believe will sustain for extended periods?
The RTD/white spirits and craft resurgent trend is showing considerable promise in the international market and is beginning to make inroads into India’s domestic market, albeit at a nascent stage. The RTD market, at the moment, is dominated by rum-based products (~80 per cent).
The pandemic has accelerated the premiumisation trend. As a result, consumers’ preferences have consistently moved away from a utilitarian concept of alcohol products to seeing them as the central pillars of creating bespoke social experiences.
6) How is the supply chain reacting to stabilisation and growth in the market?
The supply chain for imported products and raw materials is still facing headwinds due to its global disruption. We expect the challenges to persist for some time before getting normalised. However, the supply chain is fully stabilised for BII products, and its responsiveness is back to pre-Covid levels.