According to industry sources, India has kept taxes high on imported spirits as it helps the government generate revenue from alcohol sales and keep consumption in check
According to industry sources, India has kept taxes high on imported spirits as it helps the government generate revenue from alcohol sales and keep consumption in check
French liquor giant Pernod Ricard on Thursday urged India to cut its hefty tax on imported spirits, saying tariffs put many of its drinks out of reach of consumers.
The 150% tax on imported spirits has long been a sore point for the industry and poses a “major challenge” for Pernod Ricard, South Asia CEO Thibault Cuny told Reuters in an interview.
“We are for free trade… 150% in India is far more than many other markets. It is causing certain types of products to become unaffordable,” Mr Cuny said in Pernod’s office on the outskirts of New Delhi.
Asked whether the tariff should be dropped, Mr Cuny said: “Yes, yes, we should go to zero… the ultimate goal should be 0%.”
According to industry sources, India has kept taxes high on imported spirits as it helps the government generate revenue from alcohol sales and keep consumption in check.
India’s $20 billion alcohol market is projected to grow at 7% each year, with whiskey and spirits among the favourites, says the IWSR Drinks Market Analysis, making the country of 1.4 billion people a key growth market for companies like Pernod and Diageo makes.
Pernod is the second largest spirits group in the world and owns several popular brands including Chivas Regal, Ballantine’s and Glenlivet Scotch Whiskey and Absolut Vodka.
social acceptance
In recent years, social acceptance of alcohol consumption has increased and bar culture has grown in India, leading wealthier Indians to consume premium whiskey and Scotch brands.
Prices vary across Indian states, but for comparison, the company says a bottle of Chivas Regal costs about 6,090 Indian rupees ($80) in the southern state of Karnataka, compared to about 28 pounds ($30) in London .
During the interview, Jean-Etienne Gourgues, CEO of Chivas Brothers, said such price differences were “not fair”. India is the largest market for Chivas by volume, he added.
Pernod in India operates more than 30 bottling plants and also has a distillery and winery.
Mr Cuny said India is one of Pernod’s “key strategic markets” with plenty of growth potential, adding that the company sees growth for brands like Ballentine’s in smaller cities and communities beyond New Delhi and Mumbai.
Import taxes are not the only hurdle to running an alcohol business in India. India’s more than two dozen states each have their own guidelines regulating the sector, including requiring companies to obtain approval for new brand launches.
“India is probably the most complex market to manage in the world for the industry. That is the reality,” Mr Cuny said.
