Pernod Ricard will focus on consumers to become world's leading supplier

Pernod Ricard aims to increase underlying sales and operating profit growth to 5% in the medium-term by focusing on innovation, ramping up its digital strategy and trading shoppers up to premium spirits and wines.

The group said it enjoyed 5% annual growth before the economic crisis and believes it can return the business to these historical levels.

Key to its strategy will be switching the focus from a brand-centric model to a consumer-centric one, it revealed at its capital markets day in Paris today.

The Absolut and Jameson supplier wants to overtake Diageo to become the world’s biggest spirits company, but refused to put a timeline on when this might happen.

Gilles Bogaert, managing director of finance and operations, said: “We are today a strong number two but not the leader. On the road to leadership we need to focus on our top line performance, accelerate growth and seize growth opportunities.

“We want top line growth to be higher than the industry. Our historical growth has been 5% over the last 15 years, and our mid-term goal is to get back to that, to get up to 4% or 5%. We are growing at 2%. That’s better than a year ago when we were flat. In 2015-16 we want to get closer to our mid-term objective, but it will take a while.”

Pernod Ricard is celebrating the 40th anniversary of the merger between the great pastis rivals, Pernod and Ricard, and Alexandre Ricard, who became chairman and chief executive in February, putting the founding family back in charge of day-to-day management for the first time since 2008, said he is looking to past successes to drive future growth.

Ricard said: “I will not give a timeline for when we will become global leaders. We want to drive the best top line growth in our sector. We need to drive growth quicker than our industry. That’s our first priority. This is the mother of all battles, the growth from which everything flows.

“The father of all battles is mindset, reconnecting with our entrepreneurial mindset, taking calculated risks, turning global strategy into local actions. We must be the first to seize opportunities.”

Pernod Ricard said the majority of acquisitions are likely to be “bolt-on” deals like the one that saw it snap up Californian winery Kenwood.

It said it will identify "white spaces", "where we have opportunities through mergers and acquisitions or innovation to expand our portfolio". 

Ricard would not be drawn on which categories the business might move into, and added: “We are moving from a brand-centric approach to a consumer-centric approach. Consumers don't think about categories. A consumer-centric model is the cornerstone of our priorities. We need to strengthen our consumer focus, leverage new technologies and spend more time with them to better understand their needs.

“Consumers are no longer loyal to one specific brand, but to a range of drinks for different occasions. The winning brands will stand out for a set of emotions consumers identify with and relate to.”

The key areas where it will seek to drive growth are the US, China, India, Africa and the Middle East, according to Ricard.

When asked about Europe, he added: “Europe is one-third of our business. Some markets are doing well, others have gone through struggling times, and eastern Europe has been a clear growth driver, that has stalled a little bit, specifically in Russia. We are in 1% growth there this year. Germany is performing well, despite a tough first half.

“The UK, both driven by market dynamics and the outperformance of our team, which is doing a really good job in the UK, is doing well. In Spain for the first time in a long time we have year-to-date growth. There are green shoots of recovery.”

Pondering on how Pernod Ricard might dominate the global spirits market, Ricard said: “We have all we need to succeed: vision, ambition, the brands. Others have it too, so what will make the difference? Why am I confident we will win? We have a unique competitive advantage. We are united, rock solid – 94% of employees are proud to work for PR, 88% feel fully and strongly engaged. Everywhere you go you sense this pride at being Pernod Ricard. We have this shared thirst to win, we are united like a big family and nothing is stronger than a family.”

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