FRANCE: Comment: Pernod can set the pace with new structure
Pernod Ricard will restructure its whisky and Cognac operations. Although the US has not yet cleared the acquisition, Pernod will integrate the brands it bought from Seagram more closely with its own. The restructuring is the latest in a series of moves that have turned Pernod from a virtual nonentity into one of the drinks industry's largest players. It now has a better portfolio than Allied Domecq or Bacardi-Martini.
French drinks group Pernod Ricard has announced a restructuring ahead of US
approval of its joint takeover with Diageo of Seagram's drinks business.
While the group had hoped for approval by July 2001, the process has been delayed by concerns over Diageo's competitive position. Nonetheless, approval of the Pernod part of the bid is almost certain.
As a result, Pernod has already begun to integrate the Seagram brands with
its own. It will create a new whisky division based in Scotland, which will
include Seagram's Chivas label as well as Pernod's existing Scotch brands.
It will also create a Cognac division based around Seagram's Martell brand and its existing brands. Both units will operate autonomously across the world.
This restructuring follows Pernod's earlier sales of its Orangina soft drink unit, its fruit-preparation division, and its UK Oddbins off-license retail chain. All these moves are based on the same strategy of becoming a focused and specialised company, driven by strong brands and a wide international spread.
Pernod's potential is strong. Many of the existing Pernod Ricard brands and
the newly acquired Seagram brands could be hugely successful if marketed correctly,
but are not cash cows at the moment. Brands such as Seagram Gin and Chivas sell
in large volumes but need rejuvenation; brands such as
Jameson Irish whiskey and Havana Club rum are fast-growing but need strong global distribution and marketing to keep this up.
Niche, 'ethnic' brands are set to be an increased threat to major brands over the next few years; at the same time, the spirits industry is becoming increasingly globalised. Havana Club, as well as Pernod's vodkas Wyborowa and Zubrowka, are excellent examples of premium ethnic brands. Such a range leaves Pernod set for success.
The latest restructuring should further both Pernod's global reach and its ability to focus on brand marketing. With a stronger portfolio than closest rivals Allied Domecq and Bacardi-Martini, the right marketing strategy could see Pernod outpacing them.
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Strategic Review 2001 Pernod Ricard
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