Global market turbulence, beset by the sovereign debt crisis in Europe with slow consumer spending on austerity measures, has made a variety of businesses reluctant to invest, and instead hoard reserves for more rainy days.
This business trend has been prevalent since the global financial crisis in 2008 with a series of collapses and bailouts of the financial sector that eventually affected commerce or manufacturing.
However, Pernod Ricard SA, a France-based spirits and wine giant, has noticeably stood out in the industry as it was able to sustain the growth of the company through investments and product innovation.
Pernod Ricard CEO Pierre Pringuet also had to thank Asia’s fast-growing economy where it helped the company offset low consumption in Europe. It forecast double-digit sales growth in Asia over the mid-term.
Investments in marketing and people, as well as the so-called “premiumization” of its brands, have been part of its long-term strategy the company has adhered to over the years, despite cyclical severe downturns.
“We have always had the same approach in our long-term view on growth and development which includes sustaining marketing investment and intimacy with our consumers,” Pringuet said in an interview with The Korea Herald in southern Seoul on Thursday. Pringuet came to Korea from the Paris headquarters to launch social contribution programs.
As for marketing investment, Pringuet said it spends about 19 percent of its annual net sales, noting that this exceeds that of its competitors.
However, he emphasized, above all, the value of the people -- its employees, since they are the ones who can carry out the company’s long-term vision of sustaining premium brands of Pernod Ricard and directly communicate with global consumers, including young adults, to promote responsible drinking, the CEO said.
“Because all of our strategies are based on (promoting) high-quality products, this means that at the end of the day our consumers will not drink just for drinking but with a clear commitment of being responsible, which has been part Pernod Ricard,” Pringuet said. “Our motto is drink less, drink better.”
Product innovation is another key to sustainability.
This could include introducing new products, or “redeploying” its portfolio of brands in case of Korea where it is facing a downturn in the traditional whiskey market.
Pernod Ricard, whose brands such as Ballantine’s and Imperial are most widely known in Korea, has seen the local whiskey market shrink 5 percent over the years, while the non-whiskey space, including white spirits grew exponentially with an average growth of 50 percent.
This is where the French distilled beverage maker seeks to redeploy its premium white spirits such as Absolut vodka and Olmeca tequila for emerging female or “modern” consumers to counter a whiskey downturn in the country.
As Asia continues its growth trajectory, its consumers -- Koreans included -- will seek more sophisticated and premium taste of cocktails, or mixed alcoholic beverages, Pringuet noted.
Pringuet said Pernod Ricard would be there to offer the experience of so-called “mixology” through its brands of white spirits, especially for female consumers. The chief executive hopes to attract and gain their recognition as part of his final goal for the company before his retirement at the age of 65 in 2015.
“Cocktail is happening in Korea, and we are the major actor of this trend,” said Jean-Manuel Spriet, CEO of Pernod Ricard Korea.
Innovation can also include acquisitions as a means to secure new brands for consumers, Pringuet said.
Between 2001 and 2008, Pernod Ricard made three notable deals: the acquisitions of Seagram, Allied Domecq and V&S Group.
The total value of those three deals amounted to 20 billion euros ($26 billion), which has increased Pernod Ricard’s sales fivefold, profit sevenfold and market capitalization eightfold, Pringuet noted.
“You can expect to see more acquisitions in the future as part of innovation,” Pringuet said. “We just can’t say what and when.”
Continuing social programs worldwide promoting responsible drinking, environmental preservation and culture of markets where its products are made and offered are also a key part of the French spirits and wine company’s long-term strategy.
Pringuet said Pernod Ricard Korea will be having a “Responsib’ALL Day” on June 5 in Seoul, as part of the Paris-based company’s global campaign aimed at encouraging responsible drinking.
By Park Hyong-ki and Choi In-jeong
(
hkp@heraldcorp.com)
(injeongchoi@heraldcorp.com)
