The just-drinks interview - Patrick Ricard
A major takeover, persistent speculation about further acquisitions and most recently a legal wrangle with a prominent competitor over the ownership of a key brand have made the past year or so fairly eventful for Patrick Ricard. So Pernod Ricard's veteran CEO and chairman had plenty to talk about when Olly Wehring met him in Paris last month.
It's been a colourful 12 months in the history of Pernod Ricard. Having purchased Allied Domecq in July last year, the French drinks giant has been busy bedding in Allied's brands. The results, while mixed, suggest a prosperous future, particularly given Pernod's previous success in integrating the former Seagram brands, which included Chivas and Martell.
In spite of the plaudits Pernod won for sealing the Allied deal, the group's chairman and CEO Patrick Ricard clearly regrets that he was unable to carry off Allied's Tequila brand Sauza as part of the prize. The company reluctantly gave up Sauza to get Fortune Brands onboard.
"If we could have kept that Tequila we would have been very happy," Patrick Ricard tells just-drinks. "But we weren't able to do the deal alone, as it was too big for us and when you want to make a deal, everyone has to find some interests, so that's all. That's life," he laughs.
Despite being linked with Herradura Tequila earlier this year, however, Pernod saw the Mexican company hook up with rival Brown-Forman. Ricard is typically Gallic in his insouciance on the subject. "I feel nothing," he says, shrugging his shoulders. "I've no comment to make on that. We have a Tequila that's doing quite well in Russia, for example, which is Olmeca, so…" Another shrug.
Changing the subject, but staying on the theme of acquisition speculation, I put it to Ricard that the possible sale of Vin & Sprit, the state-owned holder of the Absolut vodka brand, may prove tempting. "The new Swedish government (elected last month) said, before it was elected, that it would sell Absolut," agrees Ricard, "so if the brand is put up for sale, as we do for any brand or company that goes up for sale, we will take a look at it, and we will see what we will do, if we do something. Everything that happens, anywhere, in any market, we will be there, sometimes to do something, sometimes to do nothing."
Pernod is a little more pragmatic than some of its competitors, Ricard claims. "Everything that makes sense will be looked at - big or small, brown or white, wine or spirits. We will look at everything."
Pernod's performance in its home market, meanwhile, has proved cause for concern of late. In France last year, sales slid by 1.1%, suggesting that the company has problems on its own doorstep. Ricard, however, is upbeat about the situation, and believes the company has turned a corner.
"The French economy is better this year than it was the year before," Ricard claims, suggesting that his namesake pastis brand is starting to perform again, having focused back on its traditional consumers instead of trying to win new ones. He also believes his countrymen may finally have grown accustomed to the new legislation regarding drinking and driving. "People have hopefully worked out a way to drink and find alternative transport. All those things together suggest that the market is catching up. Whether this will last, I've no idea."
A couple of years ago, I put it to Ricard that a French drinks company should have a French wine brand, if only as a talisman. At the time, Ricard dismissed the idea saying it was too hard to make wine in his homeland. Since then, the company has taken on two Champagne brands - Mumm and Perrier-Jouët - again from the Allied purchase. Whilst Ricard is happy to have the two French brands on board, he is still reticent about French wines. "I think it's easier to sell wines from other countries where it's easier to work than in countries - like France, which may have the best wines in the world - where making wine is not easy," he says.
But the over-supply situation in Australia is hardly a bed of roses? "Australia is now like wine in other countries," Ricard concedes. "Maybe it's a pity, but that's the way it is. So instead of enjoying double-digit growth in the past with Jacob's Creek, we only posted small growth last year but we almost protected our margin."
The long-running saga over Havana Club blew up again in August, with Pernod being told by the US that it was not allowed to renew its trademark registration in the country. Bacardi subsequently announced that it was launching its own Havana Club rum in the country. Surely Ricard is tired of talking about the situation? "Oh no, no, not at all," he says. I take a deep breath, and put it to him that both Pernod and Bacardi are as convinced as each other that they are right and the other side is wrong. Ricard's reaction is startling: "Until now, along with our competitors, we are fighting on the ground to attract customers - be it through better marketing or better products," he says, his voice growing louder. "We never fight in the courts to beat a competitor. So it's something new to us with Bacardi to be fighting in the courts. When you have a brand that is agreed belongs to you - even by the authorities, which are protecting the brand. When you have a competitor lobbying to introduce a law to forbid you to renew your brand, is it right?"
But Bacardi believes the brand was seized illegally following the Cuban revolution. "The brand was not confiscated," he retorts. "The Arechabala family (the original owners of Havana Club) were almost bankrupt when the revolution came. They could have renewed the brand, but they did not. That brand was owned by nobody." The Cuban government registered the brand in 1966 without any opposition, Ricard says. It was only when Bacardi saw Pernod's success with the brand, Ricard claims, that the US-based company started fighting with legal weapons. "Now you can say what you want," he says, "but you know that my consideration for those people is not good." Ricard warns that the ongoing struggle will be a long one. "As long as we can do something, we will do something. We will go to the courts, maybe we will lose, but we will fight as long as we can."
With our time drawing to a close, I venture to ask whether Ricard has had enough of the cut and thrust of the global drinks industry. After all, at 61, is he not keen to put his feet up and enjoy the fruits of his labours? "Yes!" he laughs. "And I will, but I will wait until I'm 63." Why wait another two years? "Sixty-three is the age at which you get 100% of what you are entitled to when you retire, unless the French authorities change the rules, then I may have to work a little longer." As he said, he works for a pragmatic company.
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