French liquor giant asks India to cut taxes on imported liquor

France’s Pernod Richard has urged India to cut taxes on foreign liquor as the tax keeps brands out of reach of consumers. The call came after several states offered discounts to bring in liquor revenue.

Pernod also hoped talks between Britain and India could lead to a free trade agreement that would lower the whiskey tax in Delhi.

“It’s a fantastic opportunity not only for Scotch whiskey producers in the UK, but also for Indian consumers,” said Jean-Etienne Gourgues, chairman of Chivas Brothers, as he called for a cut in import duties.

Colossal Tax

“This 150 percent rate, as it is now, limits consumers’ ability to buy quality Indian whiskey,” he told News18 TV station.

Much of the whiskey is imported in bulk for local blending.

“What we are collectively pursuing is to move from a gradual reduction of this rate from 150 percent to zero percent over a five-year period,” Gourgues added.

Pernod owns brands such as Absolut Vodka, Glenlivet Scotch whisky, Chivas Regal and Ballantine’s.

Gourgues also said the French group planned to introduce labels that would fit into Indian pockets.

“India is the largest market by volume with fantastic growth potential,” he said.

Rajasthan tribal women overcome fear of syringes to lead Covid battle Modi and Macron call for ‘immediate’ end to hostilities in Ukraine, but differences remain

Despite attempts to crack the market, Scotch accounts for just 2 percent of India’s liquor trade, which is expected to grow twice as fast as the global growth of 3.5 percent.

The Indian Council for Research on International Economic Relations (ICRIER) estimates that the Indian beverage market was worth €49.7 billion in 2020.

Experts also say India will have 100 million new drinkers in the next eight years, bringing the number of drinkers to 386 million by 2030.

Thibault Cuny, Pernod’s South Asian CEO, also called for a rate cut.

“We are in favor of free trade… 150 percent in India is much more than many other markets. It creates unaffordability of certain types of products,” Cuny told Reuters separately.

Drinkers paradise

Economists say consumption would double by 44 percent by 2030 in India, where drinking is no longer a social taboo and tens of thousands of alcohol shops across the country are mushrooming.

But tax-laden price tags from imported brands that vary from state to state can weigh on sales.

However, Delhi-based ICRIER, India’s leading economic think tank, said taxes will not change the habits of the eager Indian middle class.

“While 50 percent would buy more of the same category of alcoholic beverages they consume, 26 percent are expected to switch to higher-end brands,” ICRIER said in a study.

The remaining 24 percent will try newer products, it added.

Happy hours

City residents praised Delhi’s state government after it cut taxes by a quarter in April to boost revenues from what’s called Indian Made Foreign Liquor and other spirits.

In February, prices even fell below minimum rates in Delhi, which consumes 500,000 liters per month.

“It’s a bloody riot,” said an expatriate who identified himself as Justin as he waded through a sea of ​​buyers at the Star City liquor store in Delhi, holding a rack of mixed Scotch.

Maharashtra allowed supermarkets to stock wines in January and officials said happy hour sales were increasing in the coastal state.

West Bengal took in $250 million in just a month after cutting taxes by 20 percent on local brands in the state.

The BJP party, which rules India, smelled of cash when it granted a 20 percent tax cut in the state of Madhya Pradesh it rules.

Originally published on RFI

Leave a Comment