Two drinks giants considering IPOs in India
With both Pernod Ricard and Carlsberg reportedly considering applying for Initial Public Offerings (IPOs) in India, how might this reshape the drinks sector in the market? Ron Emler reports.
India is the single biggest growth engine for the world’s beverage alcohol sector: it is also a nation of shareholders where the growing middle class and increases in wealth encourages individual investment.
That is why global alcohol companies are evaluating ways to unlock value from their Indian operations as they seek to benefit from rising consumption in the fastest-growing big economy.
Today there are almost a million people in India of legal drinking age and the market is predicted to continue expanding steadily in comparison to America and Europe where moderation is becoming more prevalent.
Expected growth
Total beverage alcohol (TBA) volumes in India expanded at a combined annual growth rate of 3% between 2019 and 2024, capped by a 6% gain in 2024 and a 4% increase in 2025, according to IWSR data.
Growth is expected to continue with volumes predicted to rise at a CAGR of +3% between 2024 and 2034. And as consumers move up the scale to more aspirational brands the scope for wider margins from premiumisation grows.
That is why we may soon see two of the world’s biggest drinks groups offering to sell minority parts of their Indian businesses on the local market while retaining overall control.
The strategy is twofold. It releases cash from a buoyant part of the global business to reinvest, while it further engages the connection between the company’s brands and individual shareholders.
Pernod Ricard and Carlsberg
Earlier this year Pernod Ricard appointed advisers to consider an Initial Public Offering (IPO) of its business in the subcontinent, its second largest export market and its fastest growing major market despite the legal wrangles which prevent it trading in the Delhi area.
The French giant neither confirmed nor denied the story, sheltering behind the normal corporate platitudes about always considering the best interests of shareholders and the use of funds. But such a move would make sense in lowering the group’s debt level.
Meanwhile, Carlsberg, which holds about 22% of the Indian beer market through its wholly owned local subsidiary, has confirmed that it has filed official notice to the financial authorities that it is considering an IPO, but details remain confidential.
However local reports suggest that an offering worth up to US$700 million is on the cards for later this year if the market conditions are favourable.
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The offer to the public, its is reported, would not involve the issue of new shares and would value Carlsberg’s Indian company at about US$4 billion.
Subsidiary companies
It is not uncommon for big drinks companies to have minority shareholders in subsidiary companies. For instance, Diageo holds a 65% controlling stake in East African Breweries which it plans to sell to Asahi later this year.
And Asahi has agreed with East African governments that it will not seek to increase that stake.
Although it consolidates its United Spirits India subsidiary its its own accounts, Diageo’s controlling stake in the business is just 54.8% with the remainder owned by institutional and individual shareholders.
The same is true of Heineken, which is India’s biggest brewer through its 61.5% controlling holding in United Breweries. After buying these stakes from Vijay Mallya and increasing them as his business empire collapsed, neither is likely to seek to increase their holdings.
Indeed, such an exercise would be costly as they would be required to seek 100% control by offering a substantial premium to other shareholders at a time when all drinks companies are seeking to cut their debts, not add to them.
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