Pernod signals Indian ambition

Pernod Ricard’s Indian subsidiary has extended its borrowing limit to Rs1,500 crore (£161.5 million), a sign that the group is keen to tackle rival Diageo’s current dominance of this market.

According to a report in the Economic Times, Pernod Ricard gave no indication of when it might use these extra funds, although a spokesperson told the paper: “A resolution was passed by the board of directors to increase the aggregate borrowing limit for ongoing business operations and working capital requirements.”

The move follows an earlier Rs900 crore (£96.9m) borrowing by Pernod Ricard in June 2014 as the company moved to maintain the 18% profit rise it enjoyed in the Indian market during the 2013/14 financial year.

With the help of leading domestic brands Imperial Blue, Royal Stag, Blenders Pride and 100 Pipers, as well as distribution rights for other Pernod brands such as The Glenlivet and Absolut Vodka, the group will no doubt be hoping to take advantage of recent turmoil at United Spirits which, together with its major shareholder Diageo, holds a combined 36% volume share of the Indian spirits market.

Boasting annual sales of 15m cases, Royal Stag is the biggest seller by volume of all Pernod’s brands, with Imperial Blue not far behind at 12m sales.

Pernod Ricard’s new CEO Alexandre Ricard has made no secret of his wider ambition to steal Diageo’s position as the world’s biggest spirits company, although he indicated that the growing African drinks market was the group’s prime target. However, as part of this drive the company announced last year that it was taking steps to produce its Imperial Blue and Royal Stag Indian whisky brands on this continent as well.