Interview, Part 1: Paul Duffy, Chairman And CEO, Pernod Ricard North America

Last summer, Paul Duffy was appointed chairman and CEO of Pernod Ricard North America, having previously led Pernod’s U.S. business from 2008-2012. The U.S. unit is off to a solid start in Duffy’s second tour of duty, with sales up 5% in the six months through December, driven by Jameson Irish whiskey’s ongoing expansion. SND managing editor Daniel Marsteller recently met with Duffy at Pernod’s New York City headquarters to assess the challenges and opportunities ahead.

SND: What have been the biggest changes in the U.S. market—and at Pernod Ricard USA—since you last led the business?

Duffy: I left in 2012. What do I see? Well, there’s more wholesaler consolidation, and Pernod Ricard has to respond to that. We have long-term commitments with our wholesalers, which we’re very happy with (ed note: Pernod’s largest partners are Southern Glazer’s, which handles its brands across 36 states, and RNDC, with which it’s linked in 15 states). We’ve thought about how we can deploy our resources best to maximize our results. That led to a significant change in our route to market in mid-2016. Texas, California, Florida and New York—the four big states—now report directly to our new chief commercial officer, Julien Hémard, and we’ve put more resources in-market because we believe that’s where the opportunities are. You battle the U.S. on a state-by-state basis, not necessarily on a national basis. That’s a big change. Also, the pace of innovation continues unabated. Retailers ask, how much shelf space realistically can innovation take? The challenge is making sure we have stickiness in our innovation. We’ve set up a new brand ventures team that went live in September. It’s a specialized team trying to find and incubate new brands, with our recent acquisition Smooth Ambler being a good example. Other things we see on the consumer side are the continued explosion of digital, the need for authentic brand stories and the rising trend toward hyper-local products.

SND: Absolut declined 3.4% to 3.9 million cases last year in the U.S. How is the current outlook?

Duffy: We’ve made a number of changes to Absolut. We introduced a much more targeted consumer campaign just over a year ago, and we’re happy with the first results from that. We’ve also streamlined our portfolio, pulling some flavors out and focusing more on the original vodka. Now we want to make bigger, bolder bets in terms of innovation. While we’ve streamlined those lower rotating flavors, we’ve also introduced Lime this year. We’ve had a great order book for that. We also think Absolut Elyx is going to create a halo for the franchise. We’re incubating it in a measured way, and we’re very happy with the results at this stage.

SND: Jameson grew 16% to 2.8 million cases last year. What’s the update there?

Duffy: The Jameson success story is incredible. Back in 1988, the brand was under 500,000 cases worldwide. Now you have a brand that’s growing at a tremendous rate. The original 750-ml. was the third highest-selling whisk(e)y in the U.S. last year. It generated the most dollar sales growth of all whisk(e)y SKUs. It’s in double-digit growth across 49 of the 50 states over the last five years. We don’t see any change to its momentum. It appears to be moving into broader markets, for example, the Hispanic market, which we think is really exciting.

SND: How is Pernod leveraging the growth in single malt Scotch?

Duffy: Single malts have been growing nicely, and we see that continuing. On The Glenlivet, we recently introduced Founder’s Reserve, which got off to a very good start in a limited number of markets. In the second half of last year we adjusted its price to move it from above the 12-year-old to below the 12-year-old, and that was important, because Founder’s Reserve now becomes our entry-level into the single malt category. It also allows us to move up pricing on the 12-year-old. That’s key, given the supply considerations that exist in single malt.

The full interview with Paul Duffy will appear in Impact’s March 1&15 issue.

Tagged : Pernod Ricard

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