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Irish Times - Business This Week
Friday, 1 March 2013
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Pernod Ricard
toasts success
Interview,pag e 4
Toastingthe Irish h
contribution
to a Frenchsuccess
story
Suzanne Lynch
European Correspondent
The chief executive of the
world's second Largest
drinks group says the
acquisition of the Jameson
brand had a 'transformative'
impact on Pernod Ricard
Irish Times - Business This Week
Friday, 1 March 2013
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nounced a €100 million investment in its
that it uses only actors and models who are
The clamour of traffic from the nearby
Midleton plant with the aim of doubling capacity. aged 25 and over, and look so.
Champs Elysees is shut out by the doors
Similarly he believes taxing alcohol is
closing quietly behind visitors entering the
The most recent results show that in the
the wrong way to tackle the underlying
elegant, white-stucco headquarters of Pernod
first six months of its financial year, sales
problem of alcohol abuse.
Ricard in Paris.
"If really the intention is to tackle the
Inside, the atmosphere is entirely different. grew by 13 per cent, with the company aiming
to sell five million cases by 2014.
Screen shots from Havana, Absolut
abuse of alcohol, which we absolutely support,
But Pringuet is quick to point out that
and Jameson advertisements flash across
the right way is by educating people.
the much-feted figure for cases sold is only
the walls of the foyer which is recreated in
You have to do that at an early age.
the deep-blue hues of an upmarket Manhattanpart of the story.
"One of the KPIs [key performance
bar.
Strong inroads
indicators] in this regard, for example, is
As with most of the world's most powerful "The volume is not the full story," he says.
postponing the age at which one first has a
drinks companies, this stylish menage
"The value story is even more important
drink and also at which one starts consuming
of old and new is the cornerstone of the Pernod because, at that time of acquisition, Jameson
alcohol regularly. That is the right way
Ricard success story.
was still being sold at a discount to the
to tackle the abuse."
Founded in 1975 through the merger of
big whiskey brands, particularly Scotch
Pernod Ricard may hive very successfully
rival drinks companies Pernod and Ricard,
whisky. Today it's sold at a premium of 20
rejuvenated the Jameson brand - and
Pernod Ricard has grown to become the
per cent or more in some markets like the
other stablemates
such as Absolut and
world's second largest drinks group after
US."
Jacob's Creek have excelled - other drinks
Diageo. Turnover for its 2011/12 financial
While the US continues to be the main
in the portfolio have performed less well.
year reached €8.2 billion, with the company market, Jameson is also making strong inroads
posting a net profit of €1.1 billion.
in other markets, where the drink's
Extensive portfolio
Its most recent results showed a strong
premium price strategy is replicated. Eastern
Sales of Ricard, the 60-year-old anisebased
rise in sales and profits in the six months to
Europe and Russia are some of the regions
aperitif, for example, have been sluggish.
December 31st, with net sales up 5 per cent
name-checked by Pringuet.
A move to update the bottle last year
to just under €5 billion, and operating profit
He has just returned from Africa, where
failed to lift sales, while demand for brands
up 6 per cent compared to the same period Pernod Ricard last year opened a number
such as Mumm champagne are declining.
in 2011 at €1.5 billion.
of affiliate companies. The region is already
Just as Pernod Ricard modernised the
Phenomenal
success
a major focus for Diageo.
ailing Irish whiskey category, is a similar
Key to this performance has been Jameson
"Africa is a whiskey market basically
exercise needed?
whiskey. Along with its flagship cognac
and Jameson is something that is very attractive Pringuet is reluctant to be drawn on a
brand, Martell, the phenomenal success of
discussion of the merits of a new long-term
to them," he says.
the Irish Distillers brand acquired by Pernod
Similarly, he sees further potential in
strategy for the brand.
Ricard in 1986, has been one of the primary Asia, a market Pernod Ricard first penetrated
"Ricard is very much a French brand, I
drivers of the company's growth.
would say a French icon. It is suffering
almost 20 years ago.
"Transformative"
is how Pierre
"With the emergence of more and more
from a duty hike a year ago which resulted
Pringuet describes the acquisition, as we
westernised bars in Asia, Jameson is suddenly in a price increase of almost €2 per bottle.
sip coffee in his sunlit third floor office,
All classes of people drink the aperitif- the
very well positioned," he says.
overlooking a quiet Parisian square.
"It is also true from a price point. It's less
sales are very price sensitive."
"It was really the first transforming acquisition
Pringuet stresses that each product
expensive than our 12-year-old special reserve,
of Pernod Ricard. Before that, it
needs to be viewed as part of the overall
but it is suited to the night bar environment."portfolio. "We really manage the portfolio
was mainly focused on French brands such
as Pernod," he says.
as a whole. No other company has as wide a
Overall, Pringuet believes there is potential
"Yes, we acquired Wild Turkey bourbon
for further margin growth for Jameson.
some years before, but that was solely focused
portfolio as we do, across a number of ranges
on the US. Jameson was the first opportunity Though the aim is to sell 10 million cases
- champagne, cognac, whiskey."
of the whiskey in the "long term" - a target
to acquire a brand with a significant
Building up such an extensive portfolio
that appears to be supported by its
international presence."
has involved an aggressive acquisition
hefty investment in Midleton - he stresses
The acquisition paid off. Having decidstrategy, as the company increased its geographic
that, ultimately the company is targeting
footprint, introducing established
"steady growth".
brands to new markets, and complementing
"We don't want to grow to the extent
this with a healthy portfolio of local
that it affects the value or price strategy.
brands sold domestically.
An easy way to generate volume is to make
According to Pringuet, aside from the
discounts, and lower the price, but you
Irish Distillers deal, three acquisitions in
ruin the brand equity," he says.
particular have transformed the business
"The higher the price, the higher the
- the acquisition of Seagram in 2001; the
margin, for sure , but also the higher you
2005 purchase of British-based competitor
can spend behind the brand, and that's
Allied Domecq, which included Malibu
ed to close existing distilleries in Cork and
what will fuel future growth."
and Beefeater; and the acquisition of Absolut's
Dublin and focus production on Midleton,
Branding and innovation are what Jameson
parent company in 2008.
Pernod Ricard invested heavily in the
does best. Apart from its slick advertising,
"As a result of this €20 billion of investment,
brand, focusing on exports, and spearheading
the company has introduced everything
sales jumped from €1.8 billion to
from special edition bottles to film
a rejuvenation of the Irish whiskey category
€8.2 billion, while Ebit [earnings before interest
partnerships involving Kevin Spacey, all
globally.
and taxes] rose from €300 million to
It now sells more than four million ninelitre wrapped up in the traditional Irish whiskey
€2.2 billion," he says. "It represented a major
bottle.
cases annually, and Jameson delivered
transformation of the business."
Some see the marketing feat as a cynical
double-digit growth for the company
It also stacked up a significant amount
way of glamorising alcohol. Pringuet, unsurprisingly,
in more than 50 markets last year.
of debt. A number of divestments, rights issues
is well-versed in defending
All production takes place in Ireland
alongside strong cash flow have reduced
the company's ethical credentials, noting pyg
by law, Irish whiskey must be produced in
that debt to just above €9 billion, a
the country - and last year the company anii y
h
With the emergence of
more and more westernised
bars in Asia,Jameson is
suddenlyvery well
positioned... it is suited to
the night bar environment
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Irish Times - Business This Week
Friday, 1 March 2013
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position Pringuet is happy with.
"We are rated as investment grade company,
and intend to keep that grade."
Euro zone crisis
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€8.2bn
"We have what you would call a highly decentralised
organisation. Of course, there
are principles, such as respect the brand,
Mandatory retirement
As for acquisitions, Pringuet says the company respect the people but, for the rest, people
are very much in charge'of developing ideas,
Turnover for Pernod Ricard's 2011/12
is in the market for bolt-on deals. It
initiatives."
financial year, for which the company
will be another two to three years before
He cites examples of where innovations
posted a net profit of €1.1 billion
Pernod Ricard makes another "transforming"
are developed locally and then adopted by
acquisition in the range of billions of
the
company
as
best
practice,
such
as
a
recent
euro, he says.
campaign for Chivas Regal whiskey in
It is also open to acquisitions in Ireland,
Brazil, whereby consumers can upload pictures
though competition law precludes it from
and music onto a dedicated platform.
making acquisitions in the whiskey category,
As he talks in his relaxed, French manner
despite some corporate activity in this
- a world away from the more familiar
field in recent years.
Anglo-American
corporate speak that
As for Pringuet himself, the chief executive
dominates contemporary business - it's
The investment
by Pernod Ricard in its
is embarking on his final stretch with
not difficult to imagine how this inclusive,
Midleton plant, where Jameson
whiskey
the company. The unexpected death of
corporate ethos might indeed prevail with
chairman
Patrick Ricard last August
is produced
prompted the company to announce succession Pringuet at the top.
He is also something of a Europhile. The
plans.
political
response to the euro zone crisis,
Ricard's nephew, Alexandre Ricard, the
and the possible way forward for Europe,
company's chief operating officer who
headed up Irish Distillers during its expansion, were some of the themes of his address yesterday
to the Ibec CEO conference in Dublin.
will take over as chairman and chief
The
economic situation in Europe is, after
executive in 2015.
all, still a heavy drag on the business.
Patrick's sister Daniele Ricard, who had
been on the board since 1969, will be chairwoman Nonetheless, while in Ireland, he is making
The number of cases of Jameson
sure to visit Midleton. It won't be for
in the meantime.
whiskey which Pernod Ricard is aiming
the
tourist
experience,
however.
Pringuet will step down in early 2015
to sell annually by 2014
"I need to see where all this money is being
having reached the company's mandatory
spent," he smiles.
retirement age of 65. The first non-family
member to head up the company, he is a
former civil servant in the French department
of agriculture.
He joined the company in 1987 - "the
same year as Irish Distillers; it was a good
year", he smiles. Patrick Ricard's death was
€100m
"an emotional shock within the company".
"He had been chief executive from 1979
until 2008, but had retired from the operational
role of the company since becoming
chairman. He was a hugely emblematic figure."
66
If really the intention is to
tackle the abuse of alcohol,
which we absolutely
support, the right way is by
educating people.Youhave
to do that at an early age
Pringuet is positive about his experience
working for a company with a strong
dynastic heritage - though listed on the
Paris stock exchange, the Ricard family
owns 14 per cent of the business. He believes
the family identity has had a unique
impact on the culture of the company.
"I would say the main effect is that it is informal
in terms of management. It relies
very much on its people.
"There are three things I tell younger
people when they join the company. Firstly,
don't look for a manual of standards or
instructions, be prepared to move anywhere
in the world, and thirdly, don't impose
but convince."
This emphasis on collaboration and influence
is a central ethos of the company,
he says. "It's not just about a nice way of doing
things; it's also effective. It makes the
company extremely entrepreneurial,
extremely
reactive to anything that might
happen.
CV Pierre Pringuet
Name:
Pierre Pringuet
Position: Vice-chairman and chief executiveof
Irish Distillers' parent company, Pernod Ricard
Lives: Paris
Age: 63
Family:
Married with two children
Something
that won't surprise you: As the
head of a French drinks company steeped in
heritage, the cravat-wearing Pringuet isan avid
operafan
Something
that might surprise you: Priorto
joining Pernod Ricard, he worked forthe
agriculturedepartmentofthe
French civil
service
Irish Times - Business This Week
Friday, 1 March 2013
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Pierre Pringuet examines
one of the
old customs
and excise locks from the
bonded warehouse
at Midleton Distillery
that was in use from 1825 to 2001.
Below: Pringuet during a recent
Bloomberg
television interview in
London.
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