Word: ricard
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Dates: during 2000-2009
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Chugging two-thirds of Allied Domecq (Fortune Brands downed the rest, for $5 billion) will add 65% more to Pernod Ricard's global revenues, reaching about $7 billion in 2004 sales. Says Bord: "Premium is growing in all categories" --one reason Pernod Ricard decided to ride the industry's wave of consolidation and, in the process, doubled its U.S. sales. Pernod thinks it can lift sales growth of the acquired brands--including Malibu, Kahlua, Ballantine's and Beefeater--from 3% to match the 9% rate Pernod is getting out of the rest of its portfolio...
That's quite a leap in the booze business, but Pernod Ricard is no stranger to the power of consolidation. It turned sales around for Chivas Regal and Martell, up 9% and 7%, respectively, since acquiring Seagram in 2001. The degree of difficulty is greater now though, since Allied Domecq's brands and distribution channels are comparatively stronger than Seagram's were. "I don't think they'll get anywhere near the level of growth they got with the Seagram business," says Deutsche Bank analyst Graeme Eadie, citing dragging sales of Kahlua liqueur, Ballantine's scotch and Beefeater...
...blue chip to help deflect acquisition costs is Pernod Ricard's recent $120 million deal with SPI Group to extend its U.S. distribution rights for Stolichnaya--second to Absolut vodka in the U.S. and second globally--to the rest of the world. "Good for them," says New York City--based industry expert Steven Olson, whose clients include Diageo. "Owning a brand is one thing, but what are you owning? Distribution of Stoli will be far more profitable than owning Grey Goose [bought by Bacardi for $2 billion]. It's a much smarter move...
...everywhere Pernod will push newly acquired Mumm and Perrier-Jouët, as well as Stoli, at women. Particularly in the U.S., "the future is women, leading to further sophistication of the consumer," says Pierre Pringuet, director general of Pernod Ricard...
...spiked 38%. But before the celebratory champagne is all gone, Pringuet is confident "something will happen soon" in the trend of consolidation. The industry is looking to a Bacardi and Brown-Forman merger as the probable next big deal, but one thing is clear: the Continental gorillas at Pernod Ricard are thirsty...