French distiller Pernod Ricard is planning to invest $200 million to construct its largest Asian distillery in Nagpur, Maharashtra, as part of a broader strategy to reduce dependence on malt and scotch imports for the Indian market.
According to the producer of Chivas Regal, Glenlivet, and Absolut spirit brands, the distillery will be capable of producing up to 13 million litres of Indian malt annually. The investment will be distributed over the next decade.
“This investment is the opportunity for us to produce our own malt and not be dependent on any external sourcing for the Indian malt. It is part of our long-term plan and we always look at the development of our business; how much we can procure from our sister company Chivas Brothers, and what is the perception of the local Indian malt thatsome of our competitors have started to do the job of producing quality malt in India,” said Jean Touboul, managing director at Pernod Ricard India.
“It doesn’t mean that we are going to stop importing and we will continue to import Scotch whisky but given the strength of our business, the development of our business, this will be an additional part of our business,” he added.
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The company has entered into a Memorandum of Understanding (MoU) with the Maharashtra government for the construction of the distillery. Additionally, it aims to source up to 50,000 tonnes of barley annually from farmers throughout India and collaborate with the state government to enhance barley cultivation, thereby augmenting farmers’ income, as per the company’s statement.
Pernod Ricard presently runs a single distillery in India, located in Nashik, Maharashtra, alongside 24 bottling facilities across the nation. The company noted that it typically invests around 35 million euros annually in India.
Despite having minimal representation in the mass market segment, the company maintains a significant foothold in the Indian market, commanding approximately one-fourth of the total whisky market share. Its substantial portion of business stems from premium and semi-premium brands, notably Blenders Pride, Royal Stag, and Imperial Blue.
Pernod Ricard also owns India’s highest-selling scotch brand, 100 Pipers, with annual sales of 1.5 million cases. Last year, the company launched an Indian single malt, Longitude 77, joining the league of companies such as Diageo and Radico Khaitan that have debuted high-end local brands such as Epitome Reserve and Rampur.
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“For our Indian single malt, it is just a fraction of that as we have just launched the product a few months ago. But it’s not only for this brand, it’s for our entire business. It’s also to capture for a possible export. Our Indian whisky is already exported to more than 50 markets. With this additional supply, we will be able to expand the number of countries we export to. So, we are catering for our long-term needs,” Touboul said.
Pernod Ricard considers India one of its top three “must-win” countries globally, alongside the US and China. Presently, India contributes over 10% of the company’s global revenue, totaling 12.1 billion euros, and nearly a third of its global volume. In terms of profit, India ranks as the third-largest market, being the largest in terms of volume. In the fiscal year that ended in March 2023, the company witnessed a 10% increase in its revenue in India, reaching INR 25,142 crore, although net profit declined by 8% to INR 1,343 crore due to higher taxes and promotional expenses.
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