Growth Strategies for Pernod Ricard in the US
I know they're #2, but could they get to #1?
Over the past ~6 weeks, I’ve spent (probably too much) time diving into the business of Pernod Ricard, the world’s second-largest producer of wine and spirits. I’ve looked into their general performance and portfolio, how they show up on local store shelves, and their history of growth by acquisition. And I’ve done my best to contextualize all of that against the Market Map I’ve made for the industry.
I think that’s all painted a picture of a massive company that’s having a hard time getting bigger. A company with deep heritage that hasn’t been able to leverage that heritage for sustained success. A company that may be being held down by its own weight in many ways.
And I have some ideas on what they may be able to do to change all of that.
A quick disclaimer - these are all very soft ideas that I have come up with only with publicly available information and only in my spare time for “fun.” If you hire me / my team(s) to actually do this kind of work, you get a lot more numbers and some real operational plans behind them - but I can’t do that from the outside by myself…
Market Map Insights
First, let’s see what this all looks like summarized together:
In lieu of fancier visualizations, I think the quick things to check for here are:
What rows are all green (i.e. advantaged in every aspect)?
What rows have a single outlier, and why?
What red rows are most surprising / out of step with the market?
I think the answers to each of these questions highlights a specific strategic priority for effective growth, and I’ll dive into each of these:
Bring Pastis culture to American cities to compliment Aperitivo
Highlight “European Staple” selections
Develop Non-Alcoholic premium extensions
Bring Pastis culture to American cities to compliment Aperitivo
This is all about the “Ingredients” section, and it really hinges on the idea that Americans don’t really know either of the namesake brands. Pernod and Ricard are often used as absinthe in the States, but they have a much richer history in France as Pastis.
Like Suze, these all rose to prominence in the wake of absinthe being outlawed. They maintain the deep anise flavor of the original, but they’re lighter. The French generally drink them diluted with cold water as a refreshment on a hot afternoon. Pastis is to Paris what Campari is to Rome. And in today’s US where Parisian culture is still aspired to, I think Pernod Ricard is dropping the ball not making a big push in consumer advertising and bar sponsorships in not pushing this harder.
Why is Italian aperitivo culture still reigning supreme on city bar patios ~6 years after the Aperol Spritz became ubiquitous? Why not challenge Gruppo Campari for this coveted cultural touchstone? Pernod Ricard should increase the visibility and cultural relevance of both Pernod and Ricard.
But why stop there? With Lillet and Italicus both in the portfolio, you can still leverage the more traditional aperitivo culture that Campari has built. Lillet is a delight and bartenders love using it. Italicus might be even more friendly to the American palate than Aperol (though it does, crucially, lack the vibrant color). There’s a whole portfolio here that can own happy hour on the patio with big, overt branding visibility. And there’s more than a century of heritage to leverage to pull that off. No big acquisition required.
Highlight “European Staple” selections
Pernod and Ricard aren’t the only brands that have such strong heritage, and they’re not alone in fighting a losing battle for mind share either. Look at all that “moderate” shelf presence!
Martell is being swallowed up by Remy Martin ad spend. Beefeater barely exists next to Bombay - not to mention any of the myriad new gins out there (without PR’s own entrants competing). Perrier-Jouet has no brand recognition whatsoever next to the luxury house offerings. The Glenlivet is still recognizable but doesn’t carry near the weight it used to in a growing category. Absolut got massacred by Tito’s.
It seems like the house has tried to correct for much of this via expansion: the in-house development of Olmeca Altos; a rotating cast of Bourbon brands to add American staple flair; buying more premium “continental” gin brands. But I think it’s been long enough that it should be clear that those chases aren’t likely to result in a catch, and they’ve gotta dance with the ones that brought them.
Even though it seems sales are flat-to-down, each of those brands still has extraordinary consumer recognition. But there’s not any identify behind them to latch onto any more. The spirits in the portfolio with the longest lineage are all premium enough to be strong staple bases on cocktail menus and in home bars. They’re not new or fancy, but they’re staples for a reason. Chasing the next home run isn’t likely to be any more successful than doubling down on today’s stable of classics.
Those classics just need to be more visible again.
Develop Non-Alcoholic premium extensions
Pernod Ricard is clearly missing the boat here. Yes they advertise some brands on their site that fit the bill, but good luck finding them! There are brands in the portfolio ripe for NA extensions, especially Lillet (like we’ve seen from Martini). But this is a place that I think acquisition could be smart - especially because there’s an obvious target.
Giffard is doing amazing things in NA liqueurs, has a massive “traditional” portfolio, and is a multigenerational French family brand. I can’t believe no one has bought them yet, but Pernod Ricard should jump on this. This isn’t chasing a trend, but it is filling a hole. And it’s doing so with a very identity and culture-aligned brand. They’d fit right into the first two points as well. I don’t love recommending even more acquisition given recent history, but this one feels too good to pass up.
Summary
Pernod Ricard has an opportunity to unify their house of brands under a banner of European drinking culture, much of which they built! Sure, not every brand in the house fits under this umbrella, and that’s ok. But I think the days of brand houses operating in the shadow are over; just look at how often you see “LVMH” during an F1 race now. The house needs a solid foundation, and in this case it’s the same one built by both founding families more than a century ago. It’s time to lean into that identity and build the theme rather than simply hope you luck into buying the next big thing.
Alexandre Ricard - give me a call.