“Moving goods in the US is a bit of a headache” – Just Drinks speaks to Chivas Brothers CEO Jean-Etienne Gourgues

Following on from Pernod Ricard's half-year results yesterday, Just Drinks learns more about the performance of the group's Scotch whisky division, Chivas Brothers, from CEO Jean Etienne Gourgues. Jean-Etienne Gourgues became CEO of Pernod Ricard's Chivas Brothers division last year Just Drinks: Given Chivas Brothers has exporting as its business model, how are you coping with the supply chain squeeze? Chivas Brothers CEO Jean-Etienne Gourgues: We’ve had to deal with the issue of transportation for a number of months – It’s still tricky. The main problem has been regarding truck drivers in the last quarter of the year. Moving goods in the US is a bit of a headache. We’ve seen the issue become less fierce than it was, though, so there's been a recovery. The challenge remains mostly with shipping containers by boat to far export markets. We’re still suffering disruption at ports. In Scotland, we operate out of the ports of Grangemouth and Greenock – they’re almost at full capacity. We would like to see investment in ports and deep-sea freight supported at a government level. There is the potential, but we need to raise the bar in terms of operations. JD: Is Chivas Brothers’ US performance in the last half-year - sales dipped year-on-year by 3% - a blip or are you losing sleep? JEG: It's related to both phasing and supply chain. Our underlying depletions are positive and we’re growing faster than the market: we have gained share in the US. We've had a negative effect between shipments and depletions - At the end of December, our level of inventory overall in the US was extremely low. This will return in the first half of this calendar year. JD: Turning to Global Travel Retail, what are the longer-term prospects for the channel? JEG: In terms of volatility, GTR has suffered the most because of the constant changes in travel regulations – sometimes, on a weekly basis. I expect that will continue in this calendar year as well. What’s reassuring is that for some destinations, we’ve seen the rate of recovery for purchases has been higher than the recovery for passengers: The average basket price has increased. That’s a reflection in GTR of the premiumisation that’s happening in domestic markets. If this carries on, there’s no doubt that GTR will keep its brand-building stature, pushing more towards ultra-premium and prestige. It could even play an even bigger role than in the past. JD: What’s your predicted timeframe for GTR’s recovery? JEG: In terms of passenger recovery, I think it's two to three years, but the purchase recovery could be much faster. We may not need to be at 100% passenger recovery to have the business back. JD: You’re making upbeat noises about a trade agreement between the UK and India. What makes you think this is more likely now than before? JEG: There’s a real commitment at a political level from the UK Government, which was kickstarted in October. The hope has never been so high! We’re all doing our best within the industry to make it happen. A Free Trade Agreement with India would be big, for sure, but there are other markets like Brazil, or Nigeria. JD: You assumed the leadership of Chivas Brothers in July. How are you shaping the division? JEG: It's a long-term business with strong foundations and confidence - I’ve inherited a healthy situation. There’s been a bit of schizophrenia in making sure we can fuel our brands’ growth and having supply chain headaches. But, they're good issues to have. The best news is that we’re back above pre-COVID levels with a huge diversification in terms of our markets. We’re extremely hopeful for 2022; we’ve got a few innovations in the pipeline that should be released this year. The future of wine & spirits – Alex Ricard, CEO of Pernod Ricard, shares his predictions for 2022

“Moving goods in the US is a bit of a headache” – Just Drinks speaks to Chivas Brothers CEO Jean-Etienne Gourgues

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