Chairman & Chief Executive Officer, Pernod Ricard SA
Pernod Ricard CEO ‘Cautiously Optimistic’ on Growth in China
Feb.11 -- Pernod Ricard Chief Executive Officer Alexandre Ricard discusses sales optimism, the company's M&A outlook, and the ...
About Alexandre Ricard
In February 2020, Alexandre Ricard stated that Pernod Ricard assumed a gradual recovery in China would begin in March, with a return to a "somewhat normal situation" by June, excluding Hubei province. He noted that China is the company's second-largest market and that the main beverage lines affected were Martell cognac and Chivas scotch whiskey. Ricard emphasized that the assumptions were not market predictions but were provided for transparency. He also said the company was following local health and safety guidelines and remained focused on delivering its three-year strategic plan, "Transform and Accelerate," which he described as delivering on expectations with diversified growth across regions and brands. Ricard indicated that Pernod Ricard would continue to pursue bolt-on acquisitions and partnerships, as it had done with brands like Malfi gin and Jefferson's bourbon, while also disposing of assets that no longer fit its strategy.
Transcript (12 segments)
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Interviewer0:00
When you look at what's being sold and what people are drinking at home, can you give us an update on where you're expecting Chinese New Year to be? How are sales going there, and how much of a setback is it that people are not traveling to see their families?
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Alexandre Ricard0:15
Awesome, thanks for your question. By the way, it's the opportunity for me to wish a happy Chinese New Year to those who are celebrating it. It starts tomorrow, in fact it's starting tonight. The festive season is starting tonight. The stock market in China is in fact closed as of today and for the next few days. So from a selling point of view, we're fully on board and ready for a festive season. Now the key question, as you put it, is how will consumer uptake be? Well, it's starting tonight, so it's going to be difficult for me to say that. That being said, I do think we believe we're cautiously optimistic. We've had a great first half in China, up 13.3 percent in China with our brands, principally Martell, but all our portfolio brands growing in all channels, whether the on-trade, the off-trade, and particularly as well the e-commerce channel, which is extremely dynamic.
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Interviewer1:26
What are you expecting actually tariffs to be like in the US? I mean, I need to send over bottles of wine to Tom Keane, otherwise they're too expensive. Do you expect the Biden administration to take a different stance on some of these spirits sold from Europe?
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Alexandre Ricard1:38
Well, we do hope that the relationship between the European Union on one side and the US on the other will go in the right direction and will be appeased. And obviously what the entire wine and spirits industry are calling for, and of which we are part of, is we hope to see an end to trade tariffs on both sides of the Atlantic. Of course, trade tariffs imposed on some of our whiskies and wines in the US, and also on some American spirits. In our opinion, hopefully there will be an agreement one day, but it's beyond our control as you can imagine.
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Interviewer2:23
Alexander, wonderful to speak to you from New York. As you well know, what you purvey is vitally needed in the pressures and tensions of a pandemic. But it will be a changed industry. How will your industry change coming out of the pandemic?
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Alexandre Ricard2:41
Well, first of all, what the pandemic has proven is the very strong resilience of the spirits industry. We have seen compensation of severe on-trade disruption through home consumption. And these are trends that were already emerging before this whole crisis hit us. I'm talking about, for instance, the home entertainment trend, people really enjoying entertaining at home with family and friends. We have seen that the cocktail at home trend really accelerated over time. We have seen home deliveries accelerate as well, too much in Drizzly over the last few months. And post-COVID, people will go back to the on-trade because the importance of human connections, of social connections, of the on-trade experience is even more so important. But the whole piece, the things that can stay, will remain.
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Interviewer3:53
Tom's laughing because of course him and I don't drink, you know, we don't touch alcohol, it's all kale jokes. Since Francine, I know you want to get an important question on mergers and acquisitions. Can I just tell you the window display of Pernod Ricard's candy wines on Madison Avenue? It's an act of doubled. Okay, continue.
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Francine4:11
Yeah, I think our home bar also doubled. Um, Alexander, is now a good time to look for M&A? Is it a good time for you to actually swoop up something that you'd be interested in and have as a bolt-on acquisition?
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Alexandre Ricard4:24
Well, I mean, it's a great question. Part of our Transform and Accelerate strategic roadmap includes, of course, the pursuit of bolt-on acquisitions and more generally speaking, the dynamic management of our portfolio brands. And this is what we have been doing during and over the course of the peak of the pandemic. So a few months ago, we did announce completion of 100% of the acquisition of Monkey 47, just to name that one. We acquired a vermouth brand in Spain called Petroni. We have signed a number of partnerships. By the way, a year ago, a little bit more than a year ago, we also had this friendly takeover of Capital Brands in the US with that great brand of Jefferson's. And you should expect to see us do more of that in the coming months and years, of course.
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Interviewer5:16
You're at home with all of your decades of experience and your family's heritage. What's the biggest mistake you see when somebody makes a cocktail? Alexander, what drives you nuts when some American makes a lousy cocktail?
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Alexandre Ricard5:30
You know, I'll tell you one thing. I'm not a purist when it comes down to cocktails because I have taken mixology classes, it's a great hobby of mine. But the one thing I would stress is when you see the wonderful spirits that you put in a cocktail, when it comes to the ice or the mixtures, just make sure they're great quality ice or mixers. It's just like when you pour yourself, by the way, just an amazing, very expensive, high quality whiskey, just make sure your ice cube is high quality.
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Interviewer6:10
See that, I like that. You know what my advice is? Never make it yourself, always get the husband or someone else to do it. No, I love the ice idea. I think I could see a new ice maker in the Keen household. Alexander, by the way, we have great master classes online, master classes for mixology, for people who are really interested in making cocktails at home when they cannot go out.