Pernod Ricard is the second largest group on the wines and spirits' market. For the financial year 2007/2008 the Group generated €6.589 billion in sales (95 million cases) with a net profit of €840 million. Pernod Ricard manufactures and distributes a wide range of alcoholic beverages.
The Group was created in 1975 after the merger of two of the biggest French producers of alcohol and it took the name of Pernod Ricard SA. Some of the most famous brands of Pernod are the following: Ballantine's, Chivas Regal, Jameson, ABSOLUT, Beefeater, Havana Club and Ricard. There is a steady increase of the sales from one year to another as we can clearly see in the chart on the left.
Currently, Pernod Ricard is number 1 in Europe and Asia and number 2 on the American continent after his biggest rival, the British group Diageo. Since the end of 1990's the group has widely diversified its portfolio by making numerous acquisitions of other famous alcoholic brands. In 2001 it acquired a share in Seagram, in 2005 the Allied Domecq Company and in 2008 Pernod bought the Swedish company Vin&Spirits (Absolut vodka).
The alcoholic beverage industry is composed of three major types of beverages: spirits, wine and beer. But we will consider only the first two, as Pernod Ricard does not produce beer.
First of all the spirits market is the one with the highest growth during the recent years. The demand of the European, Asian and American consumers for whisky and vodka has grown up. Surprisingly, there is positive effect of the high prices on the demand which is explained by the strategies undertaken by the leading companies.
[...] This is well developed and mature industry where only the competent and the experienced actors can survive Analysis of the competitors on the market Identification of the strategic group of Pernod Ricard: We have defined 3 of the major competitors which are Diageo, LVMH and Bacardi Martini. They all have similar strategic characteristics and follow similar strategies in terms of geographical coverage, distribution efforts, pricing policy and technical leadership. Their policy can be defined as a premiumization. The products of these companies have a very high perceived value and they are symbol of a high social status. [...]
[...] Some producers such as Pernod Ricard even promote sustainable agriculture, encouraging the responsible use of natural resources. Packaging and glass bottling come out to be a top priority and therefore steps are taken to reduce the impact of these activities. The supplies that are needed in order to produce the different kind of beverages are dependant on the crops. All the products are derived from agricultural commodities. In case of natural disasters or droughts the supplies can fluctuate, so the impact of the nature should not be underestimated. [...]
[...] Pernod has a legal team of 20 lawyers that defend the interests of the company Implementation of the strategies and the vision for the future of Pernod Ricard 4 SWOT analysis For its future development Pernod Ricard has to strengthen its weaknesses and take the advantage of the opportunities. The SWOT matrix gives us the possibilities of development that should be implemented in the strategy. There are several strategic options for the company that are worth to be undertaken. The most important problem that the Group is facing is that the indebtedness level which amounts to 6.1 billion. [...]
[...] Strategic directions of Pernod Ricard: Market penetration & consolidation and Diversification: Market penetration the company decides to continue to operate in the same market with same products. This is the case here, since the European markets are maturing and the demand for spirits and wine is slowing down. To achieve the growth Pernod Ricard needs to take increased share of these markets. Pernod Ricard managed to do so, thanks to the external growth and improving quality of its product range. [...]
[...] Annual sales: Group Sales Turnover Millionnson One of the right strategy of Pernod Ricard concentration of the efforts on a limited well-known international brands. Pernod should be more active than its competitors Diageo and LVMH, which also apply the premiumization strategy, in order to win the battle between these giants. Its main competitor and the world's leading producer in this field, Diageo have a turnover that is nearly twice that of Pernod. Analysts explain this fact by the strong positions held in the wine segment but more importantly in the spirits one. [...]
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