Pernod Ricard refers internally to its luxury & prestige portfolio as Le Cercle

Pernod Ricard refers internally to its luxury & prestige portfolio as 'Le Cercle'

Tareef Shawa joined Pernod Ricard in 2014, bringing with him luxury credentials from American Express's invitation-only Centurion division, as well as seven years at LVMH's Louis Vuitton as director of global client development. Speaking to just-drinks in London this week, the group's luxury & customer relationship management director discusses the concept of luxury, its role within Pernod and how to quantify the success of luxury events.

We also spoke with the on-premise channel director at Pernod UK, Ian Peart, who provides more colour on London's place within the company's luxury strategy.

[For internal purposes, the company counts brands such as Martell Cordon Bleu, Plymouth gin, Royal Salute, The Glenlivet 18, Absolut Elyx and Perrier-Jouët among its luxury and prestige portfolio - known as 'Le Cercle'.]

just-drinks: What is Pernod's luxury strategy and how did it come about?

Tareef Shawa: Several years ago, we were very optimistic when we said we were going to target ultra-high net-worth individuals. It's a bit intimidating for us as an organisation and I think those individuals are extremely rare and hard to find. So, we are being more democratic and speaking to consumers of luxury experiences, not just luxury consumers. We are all consumers of luxury experiences.

Four years ago, the group decided to concentrate its efforts on premiumisation and luxury - more so to accelerate luxury. There has been more funding and resources put into our luxury efforts. We put a portfolio together that appeals to customers [bar owners, hotel and restaurant managers], and individual brands that appeal to consumers. We have trained around 300 employees over the past two years on the luxury mindset: 'What is it? How should I speak about it and why are we legitimate in luxury? What's the vocabulary for Royal Salute versus Chivas Regal?'

From a customer perspective, we want to show that we offer the best-in-class across a range of spirits. It's a strong commercial value proposition. Each brand has its own 'myth' to tell but we wanted to structure that. The worst thing you can do in luxury is send inconsistent brand messages. It's very confusing for consumers.

Tareef Shawa, Pernod Ricard luxury & customer relationship management director

j-d: What's the difference between premium and luxury?

TS: Premiumisation is adding different variants - maybe in flavours or similar new product extensions, as well as new packaging, maybe a difference in pricing. Also, premiumisation refers to consumers of local brands - like in India or Brazil - that are starting to switch to international brands. Luxury is a totally different mindset. We talk about going beyond merchandising and brand building to building a 'temple' for a brand that can either be the brand home - like Speyside for Royal Salute - or an immersive experience like the L'Eden for Perrier-Jouët in London.

j-d: What does the concept of luxury mean to different consumer groups?

TS: We don't look so much at the age, more the mindset. It's on two axes - an 'old money' or a 'new money' attitude. We ask: What is their approach to generating, maintaining or spending money?' For example, a 'new money' mindset in a fast lane lifestyle will consume quickly, want to try new things and probably not be so brand-loyal. But, a new money mindset that has already achieved success - and is not about earning more money - is about pursuing passion such as becoming a whisky connoisseur. That's a different mindset.

j-d: How much more does Pernod invest now compared to five years ago?

TS: I can't give you a figure, but there is an incremental impetus from headquarters to over-invest in key cities where we want to win. We have doubled the number of people who are dedicated to luxury over the past five years.

j-d: How many key cities are there?

TS: It varies depending on the season. There are ten to 12 'must-win' cities including London and New York. They are hubs of luxury consumers - either residents or travellers. Then we have seasonal migration - St Barts is key in the winter. Mediterranean locations such as St Tropez, Mykonos, Porto Cervo are key in the summer.

j-d: Is there still a luxury opportunity in China?

TS: Absolutely. We are seeing recovery in China and all of Asia. The appetite didn't go away for luxury or for hospitality, it changed in its format. We're seeing a recovery in the higher qualities of Cognac and in whisky, which is encouraging: We are more about value than volume in luxury. We are seeing smaller banquets, smaller gatherings but at a higher quality, so our numbers have improved. I think the industry's numbers have improved.

As an industry, it's our responsibility in any emerging economy, like China was or Brazil is now, or in emerging consumer groups such as Millennials, to help educate and accompany them in these categories. Otherwise, it can be a flavour of the month. I think we saw that in Asia. We didn't take the time as an industry to educate about Cognac. It was more a sign of success, without a lot of depth. Now, I think we are going back to basics with whisky and with Cognac to help the consumer feel educated and feel less intimidated.

j-d: How much of luxury is still purchased through Travel Retail?

TS: It's stabilising. Travel Retail in Asia suffered for us, as did Asia as a whole. Travel Retail is a huge window of opportunity for recruitment, but also for rewarding and maintaining relationships. There is a lot of scope to grow as we see increasing numbers of people who want to travel and hundreds of new airports being built around the world.

The trick is to attract the consumer and give them an experience in that precious hour of time that is compelling and memorable.

Pernod Ricard UK on-trade channel director Ian Peart

j-d: How do you create that relationship with consumers?

Ian Peart: Take L'Eden by Perrier-Jouët, a global concept, which we hosted during London Fashion Week and London Design Week. It was a central London space designed by Bompass & Parr, with 'bio-responsive' plants that could move. [Supermodel] Naomi Campbell DJ-ed at a party there. Firstly, it was an opportunity to get people to try our Champagne, but we also created a memorable experience.

j-d: As a business, how do you quantify the success of something like that?

IP:  it's actually very difficult. Obviously, it costs a fair bit of money.

TS: Doing that kind of event demonstrates to customers that this is a brand to be taken seriously and that we stand for something. In terms of immediate key performance indicators, we hope to have a social media impact, a brand equity impact but, longer term, a legitimacy impact with bars or nightclubs in the cities that would want to pour our Champagne. Quantitatively, of course, we are interested in increased sales but, for me, it's more about value - including market share in our categories with these brands.

We also measure where our products are placed within key markets and establishments. We monitor 45 markets - thousands of establishments. Our CEO (Alex Ricard) knows it's a long-term strategy so he's eager but he's also patient to see the results come and I think he's encouraged.

For a just-drinks interview with Pernod CEO Alex Ricard from 2013, click here

j-d: How important is it to have a consistent presence?

TS: It's two-pronged. One is to be present, to have the right relationship at the bar. The other is to encourage the desire from the consumer, or from the bartender to recommend to the consumer. Bartenders are hugely influential.

IP: We work with bartenders on training, we take them to the places where these products are made, to meet the distiller or chef de cave. It's about making it interesting for them. For example, Chivas Regal The Icon (US$3,500 per bottle), packaged in a Dartington crystal decanter - we took three London bartenders down to Devon to see where the decanter is made. They all designed their own Dartington crystal tumblers, which were sent to the account. They serve Chivas Icon in their own glasses. It's a really nice story, but it's also part of getting them into the brand and talking to the consumers about it.

j-d: Will you grow the luxury portfolio?

TS: We will, but very selectively. It's not about having lots of products, but about being best in category. Havana Club is our newest addition to the portfolio with Tributo, Union and Maximo. We'll be doing a lot of activations in London in the second half of the fiscal year. In Irish whiskey, we will add Midleton Very Rare. And in Tequila, Avion Reserva 44. In gin, Plymouth is our hero, there is also a very strong desire for Monkey 47. Our task is to find which moment of conviviality is most appropriate for which brand.