Analysis - No shopping spree for Pernod Ricard
It looks like the days of transformational acquisitions are behind Pernod Ricard. These days, the company is keener to maintain its investment grade rating than embark on a shopping spree.
Since acquiring Vin & Sprit – and subsequently the Absolut vodka brand – in 2008, Pernod has been in more of a divestment mood than an acquisitive one: The US$8.88bn paid for V&S made quite a hole in the company's books.
Today, Pernod's net-debt-to-EBITDA ratio stands at 3.6, which is at the healthier end of the company's bracket. But, that's not to say the company is looking to go shopping any time soon.
“We want to retain our investment grade rating,” CEO Pierre Pringuet told journalists at a briefing in London today. “To do this, we'd be allowed to go above four-times net debt to EBITDA, and possibly, for a short period of time, above five times, but certainly not above six times, which was the case for (the purchases of) Seagram's, then Allied Domecq, then Absolut.”
We are more likely, then, to see bolt-on purchases, such as its stake in Avion Tequila from 2011 – since raised to 84% earlier this year - and California's Kenwood Vineyards, which was bought in April.
Back in 2012, Pernod countered: “If you look at the last 12 years, we've been the main consolidator in our industry. We've been very active in M&A; the last (major) deal was just four years ago.”
Two years on, and it's clear to see that, when it comes to big-play M&A, the Paris-based company is trading on its past rather than its future. And, Pernod seems to be perfectly happy with that.
Like their counterparts in other food and drinks sectors, the world's major spirits producers have set sustainability targets for 2020, and in some cases beyond. Across the food and drinks arena, many...
Agricultural supply chains are an increasing area of focus for spirits companies, owing to the high proportion of the environmental footprint they represent and an increasing need to address pressing ...
- Experienced hands hold firm at CCEP - Analysis
- Why sports drinks fail to ride the Olympic wave
- What do US wholesalers think of spirits trends?
- How the craft economy is loosening alcohol laws
- It isn't just men who like beer - Comment
- Diageo Australia's commercial head to step down
- Luxury and e-commerce a "natural fit" - Diageo
- "We're not complacent about Brexit" - Diageo
- Diageo merges US, Canada spirits units
- William Grant upgrades Glenfiddich Cask Collection
- Global gin insights - market forecasts, product innovation and consumer trends
- The Next Seven Big Beverage Markets
- Global non-Scotch whiskies insights - market forecasts, product innovation and consumer trends
- Global rum insights - market forecasts, product innovation and consumer trends
- Global RTD insights - market forecasts, product innovation and consumer trends