Exclusive news and research on the wine, spirits and beer business

Interview, Part Two: Pernod Ricard Chairman and CEO Alex Ricard

October 13, 2016

In the second part of our interview with Alex Ricard, Pernod Ricard’s chairman and CEO talks about some key challenges the company is facing, as well as future growth opportunities.

SND: While single malt is thriving, blended Scotch has been struggling—even amid the whisk(e)y boom. Why do you think this is?

Ricard: I see three sub-segments in Scotch—if you put the value end aside—and two of them are doing well: single malt and premium blended Scotch. Where it gets difficult, though, is with super-premium blended Scotch. It seems that, in that segment, lifestyle messaging has overtaken quality messaging. The fact of the matter is that blending high-quality Scotch—12-year-old and above—requires strong knowledge and expertise. Obviously, with single malt you’re dealing with just one distillery, while it’s very difficult to produce a super-premium blend of high quality. I’m not sure consumers are fully aware of that. Perhaps super-premium Scotch’s leading brands need to better communicate the art of blending to consumers.

SND: How are things going for Pernod Ricard in China?

Ricard: Cognac has clearly been more resilient there than Scotch, for us and others. Companies have basically repurposed marketing funds from super-premium Scotch to Cognac. What we’re seeing, though, is the opportunity of the emerging middle class. From 2000 until a few years ago, affluent consumers and the prestige end of the business drove growth in China. In the future it will be driven by middle-class consumers. They can’t afford prestige brands, but brands like Ballantine’s and Absolut are increasingly within reach, so we’re investing more behind those brands.

SND: Pernod Ricard was transformed by three blockbuster acquisitions: Seagram (in 2001), Allied Domecq (2005) and V&S (2008). Do you envision more major deals ahead?

Ricard: There are no obvious gaps in our portfolio, as we cover most drinking occasions. That being said, from a strategic standpoint, what we’ve shared with the markets is we have a very active management of our portfolio. We do bolt-on acquisitions. We sometimes dispose of brands as well. This year, for instance, we acquired Monkey 47 and sold Paddy. Longer term, if sizable opportunities were to present themselves, then yes, we’d look at them without a doubt.

Subscribe to Shanken News Daily’s Email Newsletter, delivered to your inbox each morning.

Tagged : , , , ,

Get your first look at 2018 data and 2019 projections for the wine and spirits industries. Order your 2019 Impact Databank Reports. Click here.

Previous :  Next :