Corporate Strategy, Pernod Ricard : analysis and scenarios

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Corporate Strategy, Pernod Ricard : analysis and scenarios

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Themes

Pernod Ricard, Europe, America, China, French companies, wines and spirits, strategic business areas, competitive advantage, competitive parity, external analysis, PESTEL analysis, opportunities and threats, Porter's Diamond, Porter 5 forces, industry analysis, new entrants, substitute products, clients, suppliers, tourism, market analysis, main competitors, internal analysis, strengths and weaknesses, targeting, marketing mix, tangible ressources, intangible ressources, human capital, industrial capital, financial capital, environmental capital, intellectual capital, social capital, core competencies, strategic capabilities, digital acceleration, environmental aspect, Diageo, Constellation Brands, Brown-Forman, Rémy Cointreau, Bacardi

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Abstract

In this case study, we will discuss and try to understand how the French group Pernod-Ricard is evolving in its global environment but also inside the group itself.
They are the 2nd world liquor distributor; therefore, we will take into account their strengths but also potential weaknesses and convergences in the market to highlight gaps and opportunities that the brand could consider as beneficial for future growth. We will also identify the position of the group and what type of person are the customers. If the group understands where they are coming from, they will be able to define a strategic direction, knowing where it is headed and what decisions to take in order to reach new customers and create long-term value.
Finally, we will identify different scenarios that could improve the efficiency of the group in several ways such as the digital acceleration or sustainable innovation which could bring a new side to the brand and therefore make it trendier.

External Analysis - MACRO-ENVIRONMENT
1. PESTEL Analysis
2. Porter's Diamond
3. Industry Analysis : Porter 5 Forces
4. Industry convergence (Wine + Tourism)
5. Market Analysis - The Wine and Spirits market
6. The main competitors
Internal Analysis - MICRO-ENVIRONMENT
1. Targeting
2. Positioning
3. Marketing Mix/4P
4. Resources
5. Core competencies
6. Strategic Capabilities
Scenarios : strategic options/Alternatives
1. Digital acceleration
2. Assure a production that respect nature
3. Custom goods by countries

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[...] To this end, they have chosen to refocus on their flagship brands, to which they devote most of their investments in marketing and advertising. In order to survive, having a strong brand image is top on their list. By developing a strategy of growing internationalization, Pernod Ricard has succeeded in building a "global empire". Although the increasing regulation in the alcoholic beverage market is a risk factor, companies today know how to circumvent it to better understand it. Standards vary by country, and some restrictions amount to disguised protectionism. [...]

[...] Men over 65 remain the typical profile of wine and spirits drinkers, but the youngest. Men and women between 18 and 24 assert themselves more and more as a significant consumer target. A large proportion of young people consume alcohol at least once a week, ahead of the 25-34 and 35-49 age groups. We also find that the place of residence has no real influence on the frequency of consumption. There are, however, areas where the frequency of alcohol consumption is higher, especially in big cities. [...]

[...] Aperitif and lunch come in second position. It can also be noted that shopping in supermarkets is the preferred place of purchase for wine and spirits by consumers (more than 80% of purchases for this type of alcohol are made in these stores). Digital shopping does not seem to win over consumers, less than 20% of them buy wine and spirits on the internet. In terms of selection criteria, the region of the product, the price and the country of production are the most important criteria. [...]

[...] The Pernod Ricard company has many resources. These resources are all at the origin of the group's success and have allowed the company to exist for so long. However, we can see that the company has two competitive advantages, which explain in particular why the Pernod Ricard group is a co-world leader in the wine and spirits market. Industrial capital and intellectual capital are the competitive advantages of the company. Scenarios : strategic options/Alternatives Digital acceleration Acceleration of its digital transformation creation of a website and an app including a 24h hours delivery boost the visibility of their product through collaborating with influencers The Internet took an important place in people's life, especially with the pandemic going on for one year now. [...]

[...] However, Pernod-Ricard has a very good position in the market Indirect competition with dispenser brands New entrants to the wines & spirits market Little differentiation compared to the competition The high number of competitors makes us believe that the price competition is very high Big American or Chinese companies have invested in their own wineries and try to produce wine in big quantities. This makes the competition even harder for little manufactures Government: HIGH Government power is quite high for the wine and spirits market. There are many regulations on alcohol consumption, as well as taxes and disguised protectionism. [...]

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