Ricard sets out new Pernod era

Alexandre Ricard set his stall out yesterday (June 2) as Pernod Ricard celebrated 40 years of the two anise brands merging.

The 43-year-old who is one of the grandsons of the company’s founder, Paul Ricard and nephew of recently deceased Patrick Ricard, was speaking at the company’s latest Capital Market Day in Paris, ahead of the 40th anniversary celebrations at the Pompidou Centre in the evening.

In his quest to overtake Diageo as the world’s number one premium drinks company, he told analysts and journalists that the company needed to change its purpose, become more “consumer-centric”, show “clarity of purpose” and “speed of action” if its brands were going to “conquer the world”.

He outlined two priorities:

- Develop top line growth - “the mother of all battles”;

- Mindset change: “Act as leaders. The father of all battles. We have to reinvent ourselves”.

He said: “We need a global strategy, local actions. Execution is the key to realise our full potential and accelerate our business.”

To achieve this new approach, Ricard spoke of key “accelerators”:

- Portfolio management: “A game changer for us. We have the most comprehensive portfolio of drinks in the industry. The consumer does not think in categories.”

- Digital Acceleration 

- Innovation 

- Premium & luxury.

Ricard outlined four “battle grounds”: The US (re-positioning for growth), China, India and Africa. He said the company needed: “Less complexity, more simplicity, more focus.”

In answer to a question about the US, Ricard replied: “The US is most significant 'emerging' market. We are under exposed. We have the scale and the portfolio. We expect to scale up, specifically in the US. The bulk of innovation is in the US because it is the most dynamic market. But there is innovation everywhere in the world."

Earlier, Gilles Bogaert, Pernod’s managing director, finance, operations & IT, told analysts that the company was looking for 4-5% of “top line growth”. He said for the last nine months of Pernod’s fiscal year 2014/15, it had been -2%, following the company’s -23% decline in sales in China in 2013/14.

He said in the nine months 2014/15 China was now -3%, calling it “the new normal China”. He predicted “mid single digit growth” in the US and China with India in growth and Africa showing double digit growth.

To get the company back on track he said it needed to achieve: organic top line growth; improved operational margins; the right investment; and the correct M&A (merges and acquisitions strategy).

Asked what Pernod Ricard’s strategy was, Bogaert said the company was looking primarily for “bolt-on, niche producers, particularly in the US”.

He said: “It has to meet our strategic needs, possibly one brand in one geography. We need to identify ‘white spaces’ (gaps in Pernod’s brand portfolio), then innovate or tactical acquisitions such as Avion tequila and Kenwood for its Californian wine portfolio which were acquired recently by the company to fill poertfolio gaps.

As head of operations and IT, Bogaert threw down a challenge to the company’s information technology staff. He said: “The IT challenge is to contribute to growth and unleash business value. It needs to become more industrialised, have greater business intimacy, be more global and become proactive in changing the business.”

Conor McQuaid, PR’s global business development director, spoke of a “laser focus on consumers” with a new consumer rather than brand-centric approach.

He outlined four drinking occasions which the company had to focus on:

- Night out - clubbing, high energy (brand: Absolut);

- Get together - meeting friends & family (Jameson);

- Premium, socialising, luxury (Martell & Chivas);

- Aperitif/meal occasion (Ricard & wine).

He said: “We need a radical shift to a more holistic approach. A move from category-led to occasion-led, brand to consumer focus. So, portfolio management and route-to-market will give us a competitive advantage.”

The Irishman declared that there are now five channels, rather than the historical three: on-trade/premise, off trade and travel retail. The new ones being: 'home trade' as in "conviviality at home"' - by adding service and providing an experience. He cited "home parties" in Mexico as an opportunity to be capitalised on. The other new channel being ‘e-commerce’. McQuaid said it was 97% indirect serviced via multiple retailer deliveries. So, there was an opportunity to engage directly with consumers.

On innovation McQuaid said: “It is the ‘fourth big bang’ (for the company) after the takeover of Seagrams, Allied-Domecq and Absolut.

He cited the US, saying that 8,500 new products have been launched, presumably last year. Only 2% succeed but they account for circa 90% of new growth. “We need to uncover nuggets of opportunity and polish them up,” said McQuaid.