Pernod-Ricard (France)

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Pernod-Ricard became the world's #2 spirits and wine company behind Diageo in 2005, following completion of a takeover of larger rival Allied Domecq. It became bigger still three years later with the acquisition of Vin & Sprit, parent group to Absolut vodka and other brands. As a result, it now a keen challenger to Diageo worldwide, and the local leader in most major international markets except the US. Historically, alcoholic beverages formed only part of Pernod-Ricard's portfolio, which also stretched to fruit processing and general distribution. However the group took a decision in the late 1990s to focus on its core spirits business, virtually doubling in size as a result of the acquisition of part of the Seagram portfolio, and again with the purchase of Allied. Key brands behind Absolut include Ricard pastis, Ballantine's and Chivas whisky, Seagram's and Beefeater gin, Jacob's Creek Australian wines and Mumm and Perrier Jouet champagne. All non-alcoholic operations have been sold.

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Brands

Ricard Martell cognac
Chivas Regal Jameson Irish whiskey
Jacob's Creek Kahlua
Ballantine's Sandeman's
Beefeater Presidente
Mumm Perrier Jouet
Pastis 51 Wyborowa wodka
Clan Campbell Scotch Wyndham Estate
Havana Club Brancott Estate
The Glenlivet Abelour
Amaro Ramazzotti Malibu

Recent stories from Adbrands Weekly Update:

Adbrands Weekly Update 8th Sep 2016: The world's second largest spirits group Pernod-Ricard reported results for the year to June, a few weeks behind arch-rival Diageo. The market remained tough. Net profit soared by 43% to E1.24bn, but the previous year had been dented by a huge impairment against under-performing flagship Absolut. Revenues edged up by 1% to E8.68bn. (Pernod-Ricard trailed Diageo in both revenues and profits for the year). Absolut was still under pressure in the latest year, with volumes down 4% year on year, as was Chivas cognac, but there was strong growth for Irish whiskey Jameson - up 23% in the US to account for almost a quarter of total sales there and by 16% worldwide - and to a lesser extent Ballantine's scotch, the group's second largest brand by volumes. Total volumes for the group's top 14 spirits and champagnes were flat year-on-year.

Adbrands Weekly Update 21st Jan 2016: President Obama's final State of the Union speech called on lawmakers to end the embargo on goods produced in Cuba, prompting the US Patent & Trademark Office to recognise for the first time Pernod-Ricard's rights to the Havana Rum name. The Castro government seized ownership of that famed product in the revolution, and now exports Havana Rum globally in a partnership with Pernod-Ricard. Except in the US, where Bacardi lays claim to the brand, which it claims to have acquired from the original owners when they fled Cuba. The latest detente between the US and Cuba is likely to give Pernod-Ricard's Havana Club access to the US for the first time later this year, prompting a furious response from Bacardi.

Adbrands Weekly Update 10th Sep 2015: Ads of the Week: "Space Glass". Gorgeous and hypnotic new spot from Havas Work Club for Pernod-Ricard's Ballantine's whisky. The ad works beautifully in its own right, but it's underpinned by a rather gimmicky concept about blending a whisky that tastes right in micro-gravity (where normal senses behave a little differently), and then designing the glass to drink it from. Click through at the end to learn more if you really must, but it's little more than a red herring to justify an otherwise excellent ad.

Adbrands Weekly Update 3rd Sept 2015: Whiskies and (to a lesser extent champagne) were the main drivers of growth in Pernod-Ricard's results for the year to June. There was double digit percentage growth for Jameson and The Glenlivet, and high single-digit for Mumm and Perrier-Jouet. That offset continued weakness for lead brand Absolut, whose sales slipped back by 1% globally, and by 5% in its key market of the US. Currencies helped too, lifting revenues by a reported 8% to E8.56bn, or 2% organic excluding currency. Absolut's weakness prompted a E650m impairment charge against that brand, resulting in a 15% slide in attributable group profit to E861m. According to CEO Alexandre Ricard, the main drag on US sales of Absolut has been a sharp decline in flavoured variants, and a consumer shift away from vodka towards "brown spirits", primarily whisky. (Local sales of its Jameson Irish whiskey, for example, jumped 18%). One imaginative but slightly bizarre response by Pernod has been the release of a oak-aged Absolut variant that is itself whisky-coloured rather than transparent.

Adbrands Weekly Update 4th Sep 2014: In an unusual switch, Pernod-Ricard shifted US media for its drinks portfolio from Vizeum to sister agency 360i, best-known for digital work, but with an increasing workload in traditional media.


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Background

Free for all users | see full profile for current activities: Aniseed-based beverages were widely used in ancient times, usually for medicinal purposes. The ancient Greeks named this concoction "absinthin", meaning the "drink which is impossible to drink", because it was so bitter. Later the recipe for absinthe fell out of use and it was largely forgotten until the 18th century. However a classics-loving French doctor, Pierre Ordinaire, developed his own secret recipe during the late 18th century. In 1787, this formula passed into the hands of one Major Dubied, who built the first absinthe distillery in Switzerland. His son-in-law, Henri-Louis Pernod, built a second distillery to market the same drink in France from 1805.

Absinthe now became hugely popular, mainly because of its high alcohol content and low price. But as its fame and popularity spread during the 19th century, its reputation became increasingly tarnished, associated with bohemianism and public drunkenness. In 1915 the French government banned the manufacture and retail of absinthe for the duration of World War I; however it was reintroduced in 1920; and a number of companies and individuals developed their own variations on aniseed-flavoured drinks.

One such was the pastis recipe invented in 1932 by Marseilles artist Paul Ricard. Having become very successful in its home town, Ricard was introduced nationally in France during the second half of that decade. The company went public in 1962, and acquired a second brand, the cognac Bisquit, in 1967. Pernod was also enjoying considerable success in France, and in 1975, the two companies, already the country's two biggest manufacturers of pastis, merged to form Pernod-Ricard. (Known as Pastis 51 in France, Pernod's anise was introduced in other markets under the family's own name).

The combined business also housed a number of other businesses accumulated over the years including whisky distillers House of Campbell and fruit juice manufacturer JFA Pampryl. A year later Pernod-Ricard strengthened its hand further, acquiring the Dubonnet-Cinzano company. Further acquisitions during the 1980s included America's Austin Nichols, the manufacturer of Wild Turkey bourbon; French soft drink Orangina; Italian bitters company Ramazzotti; Ireland's main whiskey producer Irish Distillers; and Australian wine producer Wyndham Estate. At the same time the group accumulated a number of non-beverage businesses. In 1982, Pernod-Ricard acquired SIAS MPA, the world's biggest fruit processing business, followed by wholesale food and tobacco distributor BWG in 1988.

In 1993 the company formed a joint venture with Cuban producer Cubaron to resurrect the famed Havana Club rum marque (leading to a still-bitter skirmish with Bacardi, which claims US rights to the name). Other purchases included Siberian vodka Altai and Spain's Larios, the #1 gin brand in continental Europe. In 1997 the group became the major shareholder in bitters producer Jan Becher, when it was privatised by the Czech government. Two years later Pernod-Ricard acquired international rights to Polish vodka Wyborowa from the Polish government. Both companies were acquired outright in 2001. However the biggest purchase that year was the capture of a substantial chunk of the Seagram portfolio for around $3.2bn. Pernod-Ricard acquired a large portfolio of other drinks including Chivas Regal, The Glenlivet, Martell Cognac, Seagram's Gin and Seagram's Vodka (later sold). Sandeman's port and sherries were sold on to Sogrape, but the company retained distribution rights. Allied Domecq was acquired in 2005, with financial backing from Fortune Brands which took over some of the smaller brands. (A rival bid was assembled by Constellation Brands and Brown-Forman but collapsed because of a disagreement over terms and pricing).

During the 1990s, the group took a strategic decision to focus on its high-profit-margin alcoholic beverages, and gradually began disposing of its various other operations, mostly relating to fruit processing and fruit-juice based soft drinks. After years of unsuccessful negotiations with Coca-Cola, repeatedly blocked by regulators, Orangina-Pampryl soft drinks and Yoo-Hoo yogurt drinks brand were sold in several markets to Cadbury Schweppes in 2001. (The remaining territories including the UK were sold to Cadbury in 2004). The group also sold its controlling stake in Italian foods manufacturer Italcanditi to its partners Goffi Group. In 2002 fruit processor SIAS MPA was sold to investment group Butler Capital Partners for E170m. See full profile for current activities


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