Company Trend Analysis - Pernod Ricard Takes Three Indian Whiskies Global - MAR 2018


BMI View: Southeast Asia and Latin America are obvious target regions for Pernod Ricard India as it takes its Indian whisky offerings global, with both regions offering strong demand for whisky and a growing middle class that are witnessing their incomes rise and so can explore new spirit options, although they remain price-sensitive and cannot afford Irish or Scotch whiskies on a regular basis. The Middle East and Africa are already big export markets for Indian whisky.

The Indian arm (Pernod Ricard India) of alcohol giant, Pernod Ricard, has been given the controlling rights to build a global market for three local Indian whiskies - Blenders Pride, Imperial Blue and Royal Stag. This elevates Pernod Ricard India to the status of Irish Distillers, Pernod Ricard's Irish subsidiary, which owns Jameson Whisky, Polish vodka subsidiary Wyborowa and their Swedish arms of Absolut Vodka and V&S Group. The decision comes on the back of two Indian single malt brands Paul John and Amrut generating strong public interest in the international market.

Indian distilleries already export large quantities Indian whiskies to the Middle East and Africa through third-party distributors to cater to the diaspora. According to the latest data from Trade Map, Indian exports the largest quantity of whiskies by a significant margin to the United Arab Emirates (UAE) at 19,920 tonnes of whiskies in 2016. Following behind are the countries of Nigeria and Oman at 1,886 and 1,411 tonnes, respectively. As Pernod Ricard India pushes for a more global strategy, it is likely that the Indian whiskies will appeal to consumers in the Americas and Southeast Asian markets due to consumers' in these markets seeking new beverage offerings, but at a lower price point than Irish or Scotch whiskies.

Emerging Middle-Income Segment To Support Demand For Whiskies
Household Disposable Income, USD10,000-25,000, % of total households
e/f= BMI estimate/ forecast. Source: National Sources/BMI

From BMI's Alcoholic Drinks Risk and Reward Index (RRI) for Latin America and Asia, we highlight key markets of Brazil, Mexico and Chile in Latin America (see 'Latin America Alcoholic Drinks: Chile Enters Top 15 Globally But Risks Overshadows Rewards' , October 17, 2017) and markets of Vietnam and the Philippines in Southeast-Asia (see 'Asia Alcoholic Drinks: South Korea maintains Lead While Chile Moves Up', October 16, 2017) as the most attractive markets for alcohol drink majors to enter into. One of the main reasons for this is the rising levels of disposable incomes across the key markets of both the regions. For example, Mexico and Brazil will see its middle-income segment (disposable income of USD10,000-25,000) accounting for almost 40% of the total households by 2021, increasing the share of households able to make non-essential purchases. We believe these markets will be at the top of the list for Pernod Ricard's Indian arm to target as the positioning of the Indian whiskies will be mass-market and focus on the middle-income consumer.

Southeast-Asian States Consume The Most Whiskey Per Capita
Top 15 Countries Globally With Highest Whiskey Sales, litres per capita
f= BMI forecast. Source: BMI

Although both Southeast-Asian and Latin American countries have a large and formalized food and beverage sector, we highlight that a greater number of Southeast-Asian countries rank in BMI's Top 15 countries for Whiskey sales per capita. Laos and Thailand rank at the top of the list in 1st and 2 nd position, while only one country in Latin America, Brazil, ranks in the Top 15 at 14th place. Hence, Southeast-Asia is likely to be the priority for expansion in terms of whisky exports for Pernod Ricard compared to Latin America.