 Pernod
Ricard Set To Be No 1 Spirits Company
 There
is an exciting time ahead for Pernod Ricard - the world's No.2
Wine and Spirits Company as acquisition of the premium vodka
brand Absolut brings the company much closer to its competitor
Diageo in terms of sales volume. While Pernod Ricard believes in
operating each of its business as a separate entity, Absolut's
fate as a new brand owned company, like Chivas Brothers and
Pernod's other business is yet to be shaped.
During an exclusive interaction at the
Chivas Brother's Office in London, Martin Riley, International
Marketing Director & Stephane Beaudet, International Regional
Manager, Chivas Brothers offered Trilok Desai & Rojita Tiwari an
interesting insight into the company's global operations and
market specific information pertaining to its star brands Chivas
Regal, Ballantine's and Beefeater Gin.
Chivas Brothers, the company handling
Scotch whisky and premium gin business of Pernod Ricard is
second in Scotch whisky business and leader in premium gin. The
Chivas Brothers portfolio includes Chivas Regal, Ballantine's,
Beefeater Gin,The Glenlivet, Royal Salute, Aberlour, Longmorn,
Scapa, 100 Pipers, Clan Campbell, Something Special and
Passport. The company is responsible for the production as well
as all the marketing, strategy and planning for these brands.
While Martin Riley is the global Marketing Director for all
Chivas Brothers brands, the Pernod Ricard portfolio including
its other brands is handled through its holding company in Paris
and all other brand companies.
Martell cognac for example is managed by a
separate company called Martell & Co and the company's wines
from Jacob's Creek in Australia are handled from a company based
in Australia who is responsible for Jacob's Creek's global
sales. The newly acquired Absolut brand will be a new
companywhich will be responsible for the operations of Absolut
vodka which has to operateunder the Pernod Ricard structure.
While the recently released financial
details of the company seems bright, it is the emerging markets
like India, Taiwan, Malaysia, Indonesia, Vietnam, Singapore and
Thailand who will drive the future growth of Pernod Ricard, said
Martin Riley, International Marketing Director. Read more:
 In terms of revenue
where do Chivas Brothers brands - Chivas Regal, Ballentine,
Beefeater and others stand? What is its contribution to the
revenue of Pernod Ricard?
In terms of total volume, Chivas Brothers
contributes 20-30 per cent to Pernod Ricard Company. And within
Pernod Ricard, Chivas Regal is the number one brand in terms of
profit whereas Ballantine's is number one in terms of volume.
We have achieved all these through a series
of acquisitions. Now Pernod Ricard is the second largest spirits
company in the world. And Scotch whisky is its most important
business. However, the acquisition of Absolut will help the
company become very close to number one position. This has added
extra 11 million to Pernod Ricard's portfolio which brings the
company close to Diageo in total volume terms. We will need
around 2 million cases more to reach where Diageo is. The only
solution we have is to grow faster.
In your portfolio after Chivas Regal
which is the second best performing brand?
Ballantine's is the second highest brand in
terms of profit, however in terms of volume; it is the number
one brand. This brand is growing very fast in China,
particularly the Ballantine's 12 year old and Ballantine's 15
year old which are doing great in the China market.
What are the reasons that you
attribute to the success of Chivas Regal in China?
There are a number of reasons for China's
success. In 1990s a lot of work was done for preparing a ground
for Chivas Regal in China. We were also an early entrant into
the market which gave us an advantage over our competitors and
we had a very good and strong sales force ready before we took
over the China market. We have the biggest sales force in China
and a great relationship with the trade. In terms of building
the brand on trade, Chivas has a great presence in bars,
restaurants, a lot of pubs and discos etc. Investment on
marketing has also been quite high with some execution of some
effective promotions. We could proudly say that we have been
leading the growth of the Scotch whisky market in China. We
would continue to grow. Chivas's position in China is very
strong. The mix of green tea which goes very wellwith Chivas
really appeals the younger people in bars and discos. So, we
could say that for Pernod Ricard, China is a profitable market.
What is the present available
production capacity of Chivas Regal in Scotland and highlight
the expansion plan for Chivas?
Chivas Brothers is in a very good position in terms of
inventory to support future growth.
In recent years we have been consistently developing
and investing in our production facilities. In 2005 Allt a
Bhainne distillery was re-opened for production. In 2006 two
brand new stills were added at Glenburgie,increasing the
expected distilling capacity by 50 per cent to 4.2 million new
state of the art building in October 2004. The re-designed
distillery left enough space in the still room to add the
additional two stills expanding the operation to six stills. And
the latestrolling out from February 07 providing a visual
representation of Beefeater's traditional heritage and its place
in contemporary London.
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Chivas Brothers brands in the
emerging Asian markets
A status background information on all Chivas Brothers'
priority brands below:
Chivas Regal: The
Chivas Regal brand has been central to recent dynamic
growth in the global premium whisky category adding more
than 1m 9l cases since 2002. The brand is ideally placed
to exploit growth opportunities in dynamic, evolving
markets. The annual volume sales of the Chivas Regal range
now exceed 4.1m 9l cases, a historical high for the brand
and more than 1m increase since 2002. Marketing investment
€50m annually in the successful 'The Chivas Life' global
advertising campaign for Chivas Regal and long term vision
is to reinstate Chivas Regal as the world's leading
premium Scotch whisky.
Ballantine's:
Ballantine's is the No. 2 selling Scotch whisky in the
world and the No. 1 Pernod Ricard brand by volume. It is
the No. 1 selling super premium Scotch whisky in Asia.
17YO is the No. 1 super premium Scotch whisky in Korea
selling over100, 000 9l cases and 30YO sells over 20,000
9l cases in the Asian and duty free markets.
The Glenlivet:
In 2006 The Glenlivet became only the second premium
single malt to achieve sales of over 500,000 9l cases (6m
bottles). It is the No. 1 malt whisky in the dynamic US
market, and also making significant gains in Asia-Pacific,
Europe and Global Travel Retail. This brand recorded
double digit sales increases in all major markets during
2006/07.
Royal Slaute: The leading luxury whisky brand,
which defined the category, is the market leader in the
21YO category. RS 21YO enjoyed 14% growth in 2005/6. Key
markets in Asia for this brand are China, Korea, Taiwan
and Global Travel Retail
Beefeater: It is
world's largest selling premium gin selling 2.4m 9l cases
(over 28m bottles) in 100 countries. At over 1 million 9l
cases, Beefeater is the best selling imported white spirit
in Spain, which is the leading European gin market. The
brand is growing at 6% (Jul 06 – Jun 07) on a global
basis.
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The new packaging has been litres per year. Records show that
whisky has been made on the site at Glenburgie in Speyside since
1829. Today the majority of Glenburgie's spirit goes into
Ballantine's. In 2003, rather than upgrade the existing
distillery, the Glenburgie distillery was completely rebuilt a
few hundred yards away from the old distillery. Production
started in the on is this year we are expanding the Glenlivet
Distillery and Re-opening of Braeval Distillery.
Chivas Brothers is currently running
some promotional campaigns for Beefeater gin. Tell us more about
it?
A new global advertising campaign entitled
'Forever London' has been launched in May 07 to help revitalise
and premiumise Beefeater's image. Major investment at the
Beefeater distillery in Kennington, London has resulted in
flexible conference and meeting facilities for 150 people,
dinner seating for 80, a fully equipped Beefeater cocktail bar
for tasting, training sessions and events and the James Burrough
room which is styled around the founder's office in the 1800s
and displays the Beefeater archives which receives an average
of1,000 media and trade visitors a year.
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Pernod Ricard's Worldwide Financial
Results
Pernod Ricard's sales for 9 months till end of March
2008 touched the € 5,091 million mark. With highly dynamic
sales positive 9.3% nine month cumulative organic growth
and continuing strong growth in the 3rd quarter which is
positive 7.1% organic growth, the company's financial
chart looks pretty exciting.
Asia/Rest of World: € 1,593 million (+8.7%, with organic
growth at +13%) Martell, Ballantine's and Chivas Regal
generated nearly 2/3 of Asia/Rest of World growth. China
and India accounted for 2/3 of growth in the region and
remained the first and second contributor to the Group's
organic growth, respectively.
The sales figure in China touched 26% growth where the
whisky category achieved slight growth. The cognac
category remained highly dynamic in spite of the strong
price increases.
Sales in India also registered a positive 41% with local
whisky brands continuing their strong growth, whereas the
imported brands had outstanding growth. Malaysia,
Indonesia, Vietnam, Singapore and Taiwan grew strongly and
Thailand experienced a sharp recovery in the 3rd quarter
with 100 Pipers.
Americas contributed € 1,280 million (-3.8%, with organic
growth at +8%). North America (US, Canada, Mexico),
organic growth reached +4.5%. In US the star performers
were Jameson, The Glenlivet, Wild Turkey, Malibu, Perrier
Jouët, Mumm Napa which continued their vigorous growth in
a more difficult environment for certain brands (Kahlua,
Chivas Regal, Beefeater).
Central and South America's organic growth was outstanding
in Central and South America at +24%. Chivas Regal, Havana
Club, Ballantine's and Something Special reported strong
growth. Europe (excluding France) € 1,695 million (+5.4%,
with organicgrowth at +8%) The Europe region continued to
report strong growth since the start of the financial
year.
Central and Eastern Europe generated more than 60% of
Europe's growth, thereby increasing its relative size in
the region. Russia was the third contributing country to
Group organic growth. The other main contributing
countries to such outstanding growth were Poland, Ukraine
and Romania.
Western Europe recorded solid growth. Spain (Ballantine's,
Chivas Regal), the UK (Jacob's Creek, Malibu), Ireland
(Jameson) and Greece (Havana Club) achieved satisfactory
growth, whereas Germany and Italy were in decline. France
continued its sustained growth of € 524 million (+6%).
Whiskies (Chivas Regal, Ballantine's, Jameson, Aberlour,
The Glenlivet, Clan Campbell) and the Mumm champagne drove
this growth. Ricard was stable in a market in slight
decline.
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How has been your company's
performance in the Indian market?
After China, India is the most promising
market for Chivas Brothers. With 41 per cent growth registered
for the Chivas brands and a great performance recorded for the
local whisky brand, India is an important market at the moment.
In fact, our promotional campaign 'Chivas Life' with various
media has worked well in India.
Worldwide
performance of your brands in terms of volume and growth ever
since you bought over Absolut and percentage change ever since
you have taken over?
The acquisition of Absolut is not yet complete so it would be
too early to comment on it.
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