Ban on liquor outlets near highways set to hit Pernod Ricard’s sales

IN DECEMBER, THE SC BANNED LIQUOR OUTLETS FROM OPERATING WITHIN 500 METRES OF NATIONAL AND STATE HIGHWAYS STARTING APRIL 1

After a rough December quarter, distiller Pernod Ricard SA, which sells whisky brands, including Royal Stag, Imperial Blue and Blender’s Pride in India, expects more short-term pain from a recent Supreme Court ban on liquor outlets near highways.

Analysts said subdued discretionary spending by consumers and implementation of the Goods and Services Tax (GST) are other challenges ahead.

“Our industry needs balanced regulations and a responsible and compliant mindset and behaviour from all players. States, retailers, manufacturers, must build a balanced ecosystem. The number of liquor stores and on-trade outlets are already very low in most states. The recent decision by the Supreme Court is a real challenge on a short-term basis,” Guillaume Girard-Reydet, Pernod’s India MD and CEO, said in an emailed response to questions from Mint.

Two weeks ago, Pernod reported a 3% increase in its India sales during the first half of the financial year ended December 31, 2016 — it follows a July-toJune year — and said it was hurt by demonetisation. The bigger hit from the note ban was on sales of its local or Indian-made foreign liquor brands, with Blender’s Pride proving more resilient than others, the French distiller said in its half-yearly presentation on February 9.

The company reported a 14% jump in its India sales in the first half of the previous financial year, ended December 2015, and 19% during the same period in the year before, i.e. ended December 2014. Pernod, which also owns Absolut vodka and Chivas Regal whisky, has been posting strong double-digit growth rates in India on an annual basis in recent years.