Pernod Ricard SA (EPA:RI)
France flag France · Delayed Price · Currency is EUR
64.70
-0.90 (-1.37%)
Apr 27, 2026, 5:37 PM CET
← View all transcripts

Status Update

Mar 23, 2023

Alexandre Ricard
CEO, Pernod Ricard

Bonjour. I'm pleased to be speaking with you today to share the progress our teams have made over this past year. We've delivered excellent results and unlocked the magic of human connection for our customers, consumers, and communities across North America. When we spoke last year, we talked about the ambiguous forces shaping our environment and our business. Those forces, unfortunately, have not gone away, and more continue to emerge every day. Our muscle for advancing through ambiguity has only grown stronger. I can confidently say our team has managed through issues like inflation, the prospect of a recession, and supply chain challenges with flexibility, skill, and unparalleled dedication. Today, I want one message to be clear.

At Pernod Ricard North America, our strategy is to sustainably beat the market by activating more brands with a portfolio that meets consumers across all advantage price points and across all occasions where our brands have a right to win. That strategy is grounded in driving superior return on investment on every dollar we invest towards activating our whole portfolio through improved efficiency and effectiveness. We know that today's consumer doesn't fit in a box, and neither does our strategy. Adults today drink across multiple occasions and multiple spirit segments, and we have solutions to meet their needs. Our strategy is robust and multifaceted so that we can continue taking on and tackling the opportunities and the challenges the U.S. beverage alcohol market presents as it continues to normalize following COVID towards the historical growth trend of +4%-5%.

In the first half of this fiscal year, we have delivered +5% net sales growth in the U.S. That was slightly ahead of value depletions growth of +3% due to some phasing effects. That means we are narrowing the gap to the market as on-premise rebounded from the Omicron impact and off-premise kept its post-COVID elevated level. We opened the year with a very healthy inventory level, which we expect for the year-end. With our portfolio of winning brands, we are set up for success no matter what demand occasion a consumer is choosing or what trends are of the moment. We're playing the long game, focusing on the breadth of our portfolio against advantage price points and all occasions where our brands have a right to win instead of relying on just a few select brands in some targeted markets.

This year, our industry achieved a historic milestone in the United States. At its annual economic briefing in February, the Distilled Spirits Council of the United States announced for the 13th straight year, spirits have gained market share, and for the first time ever, have taken the share lead of the total US beverage alcohol market. This is extremely promising news for both our business and our industry. Let's dive deeper in our portfolio strategy. Because we are playing a full portfolio to its advantages, it's helpful to think of our brands and categories that guide how we approach them. Our foundation brands are at the heart of our portfolio, providing the strong, solid foundation from which we continue to build. These brands are our core, our base.

We know that consumers love them, trust them, and reach for them, which is underscored by the strong brand equity we have built with these brands in connecting them to our consumers. Our portfolio strategy is designed to maximize the value we generate through these brands. Jameson, the world's number one Irish whiskey, is in a league of its own. It consistently showed strong depletions growth in the second half of fiscal year 2022 and the first half of fiscal year 2023, and strong value conversion with the recent price increases implemented across the brand in the third quarter of fiscal year 2022 and again in the second quarter of fiscal year 2023. While consumers know and love Jameson Original, innovations are at the forefront of our growth strategy, with Jameson Orange leading the charge. It delivers a standout whiskey-forward taste, which has brought new consumers into the fold.

Jameson Orange was the number one in on-premise and number two off-premise innovation in 2022. Flavored whiskey is driving growth in the category. Jameson Orange has quickly risen to be the 3rd-largest contributor to sales growth in 2022, with momentum to achieve even more. We've also introduced a new range of Jameson ready-to-drink, or RTD products to serve increasing consumer demands. Jameson Ginger & Lime, Lemonade, and Cola are equipped to grow our prepared cocktail market share and meet consumers for their on-the-go occasions. Another one of our foundational brands, The Glenlivet, has consistently outperformed in 2022, growing 10 points ahead of the category in the off-premise. We are challenging the conventional stereotype of the Scotch malt whiskey drinker and widening the consumer base in the U.S.

There's Malibu, which is outpacing the rum category by 1.5 points in the off-premise and enjoying continued traction and success in the on-premise channel. Absolut has also seen tremendous success in its Born to Mix and Espresso Martini programs this year, and has been closing the gap to the vodka category month after month in fiscal year 2023. In the 2nd quarter of fiscal year 2023, Absolut Original beat the vodka category. We remain confident in our ambition to stabilize Absolut performance in the U.S. market. We are also building and extending upon our Absolut brand with Absolut RTDs, which are continuing to grow double digits in this fiscal year. Our research shows that our RTD growth is driven by both increased category spending and shifting within the beverage alcohol sector, with over half of growth sourced from wine, beer, and hard seltzers.

With these RTDs, we are continuing to see new consumers recruited into the brand. In addition to these powerful foundational brands, there is a section of our portfolio where we have found disproportionate growth opportunities. We have only begun to tap into the potential of our wider portfolio. As we continue to keep a close eye on the demographic shifts of the U.S. consumer, it's these brands that are positioned to catapult at an accelerated rate. Let's start with Martell. This prestige cognac is having a strong showing and continues to gain advantage in its category. Martell increased share in the first half of 2023, growing more than 20% in the off-premise, albeit from a small base and a category that is facing challenges. Martell's consumers influence culture. They're socially responsible, and they actively build their legacy.

They value prestige brands, and we're consistently engaging with them through our multicultural strategic programming, a strategic priority for the brand. We also know the tequila category is growing at a rapid pace, and by taking a strategic majority stake in Código 1530 Tequila this year, we have rounded out our agave portfolio to offer consumers quality options across all advantage price points. Código has a reputation for being one of the finest all-natural tequilas on the market, and has positioned itself well within a very competitive category, thanks to the unique quality proposition of its range of ultra-premium and prestige products. We're incredibly excited to welcome Código 1530 to our portfolio.

From Olmeca Altos to Avión to Código and our leading mezcal brand, Del Maguey, our agave offerings span from premium to prestige, providing not only an entry point, but also a trade-up option for every consumer hoping to enjoy the spirit. American whiskey is another category that continues to spotlight the high demand for premium spirits. Bourbon is booming. Consumers are enjoying this versatile spirit in a variety of contexts, from at-home mixing to high-end on-premise occasions. Jefferson's is growing ahead of the category in both the off-premise and on-premise in the first half of fiscal year 2023. Similarly, Rabbit Hole is growing 4 times faster than the category off-premise and double the category in on-premise control states, where Rabbit Hole saw distribution rise by 40% in the first half of fiscal year 2023. We're also thrilled to announce the latest addition to our portfolio, Skrewball Peanut Butter Flavored Whiskey.

This acquisition further validates our strategy of meeting consumers with premium solutions across multiple needs and occasions with a product that brings an iconic American flavor to the spirits world. Steve and Brittany, the Skrewball founders, have done an amazing job with this brand, reaching 600,000 cases since the brand's launch in 2018. We're looking forward to creating the next steps of this successful journey with them. Despite changing economic times, we also continue to see growth in our super premium and ultra-premium range, a third section of our portfolio. Consumers are viewing alcohol as an affordable luxury to elevate their experiences, often reaching for products over the $40 price point. They're looking for quality, prestige offerings, and our portfolio is positioned to offer just that.

Depletions for our premium Irish whiskey, Redbreast, were up almost 30% in value in the first half of fiscal year 2023, and the brand continues to enjoy strong demand and value conversion through price increases. Redbreast was the top revenue growth contributor in the off-premise, and second in on-premise control states, behind only Jameson. Our agave portfolio shows up once again with Del Maguey. This standout brand is outperforming an already red-hot mezcal category, growing 30% in the off-premise in the first half of fiscal year 2023. With the launch of Del Maguey Vida Puebla, we will finally have the ability to bring this brand to more consumers starting this spring. We know we have the portfolio in place to beat the market, but how does it come to life for our consumers?

We are leveraging creativity across our entire business to extract more value and drive more efficiency from every dollar we spend. It's a fundamental shift in the way we think about ROI. It permeates through everything we do. What does it mean to get ROI on our campaigns? In the United States, we have a proprietary system that ensures the dollars we're investing are capable of being a true transformation lever for this company. Marketing is a growth engine at our organization. Our demand-centric playbook ensures that we are listening to our consumers and creating personalization at scale with our campaigns. Using Pernod Ricard's proprietary tools like Matrix, we are optimizing a significant amount of advertising costs using data-driven insights to deploy our media spending against the most effective touch points.

We go further using our proprietary data about what drives consumer choice to tailor ad copy, call to action, and context, and embed it in a hyper-relevant content. Personalizing content and context makes our brands more relevant, less intrusive, and therefore chosen by more consumers. We're changing how we plan, invest, and create effective marketing campaigns, leading to a multiyear 40% improvement in media ROI through improved analytics, investment strategy, and creative performance. We are also accelerating our advertising and promotion investments in the first half of fiscal year 2023, and our A&P to net sales ratio has increased 224 basis points versus prior year. We are seeing a huge impact on the business also from our innovation propositions.

Thanks to the combined efforts of our team, we have over-delivered on our share of innovation by a 162 index, meaning that for calendar year 2022, we are outpacing the competition, and we aren't stopping there. We have set ourselves up to win repeatedly over time with consumer-centric, rigorously tested products that show up where consumers want them. Let's take a look. In addition to our innovation pipeline, we're continuing to pioneer experiences for our brand lovers with campaigns that aren't just efficient, they're captivating as well. Today, we are seeing consumers continue to seek out premium spirits brand experiences, even during uncertain economic times. The breadth of our portfolio is well-positioned to meet these diverse consumer needs and at prices that increasingly reflect the premium nature of our brands and portfolio.

Our pricing choices are well supported by our capabilities and provide a strong offset to inflationary pressures. Our revenue growth management capabilities and Vista Rev-Up tool have been deployed as strategic levers. We have successfully raised prices of our products across a wide array of brand families and sizes in a thoughtful, data-driven way, driving strong value growth. These pricing actions in fiscal year 2023 have been our most ambitious in the history of Pernod Ricard North America, and I'm very proud of our results, propelling Pernod Ricard's price mix ahead of many of our direct competitors. We're continuing to monitor consumer and market trends very closely in the second half of the fiscal year, and we'll continue to leverage the full breadth of our key digital tools to identify further pricing opportunities.

The investments we're making and the changes we are prioritizing have our long-term vision in mind: to sustainably grow and beat the market by investing in our business, our planet, and our people. In this last year, we've announced a significant investment to construct a new distillery and visitor center to further leverage the strong growth and growth potential of our premium American whiskey portfolio and our fast-growing Jefferson's Bourbon brand. Located in Lebanon, Kentucky, Jefferson's new state-of-the-art carbon neutral distillery will enable us to efficiently keep up with a growing consumer demand, not only in the U.S., but also in export markets, all while staying true to our company's long-standing commitment to sustainability. Our facility is expected to be the first distillery of its size in the U.S. to achieve LEED certification, an internationally recognized sustainability framework for healthy, efficient, carbon, and cost-saving, environmentally friendly buildings.

We've already kicked off construction in January. Our first distillation will take place in 2024, with 2025 as the target completion date for the distillery and related warehouses. On site, our distillery will feature a world-class visitor center, which will become a community staple and welcome whiskey aficionados on the historic Kentucky Bourbon Trail. In the past year, we've also completed and begun to use our new canning line in our Fort Smith, Arkansas, manufacturing facility. The high-speed canning line will be instrumental in increasing our production capabilities and swiftly bringing our premium bar quality, ready-to-drinks to market. Beyond our commitment to growing our U.S. footprint, we are deeply committed to the sustainability of our planet as global citizens. We rely heavily on a healthy ecosystem so we can produce the finest products.

Every Pernod Ricard product takes its character from the land where it was grown and the people who make it, so it is our responsibility to respect and protect our terroir. We are an agricultural company at our core and a people company at our heart. That is why we not only believe in returning on investment, we believe on returning on responsibility. Both are equally important to us, both from an environmental sustainability and a social responsibility. That's why we supported the passage of the HALT Act last year in partnership with Mothers Against Drunk Driving, Responsibility.org, and the Distilled Spirits Council of the United States and its member companies. The HALT Act allows driver performance monitoring systems and alcohol detection sensor technology to be deployed by establishing a regulatory process to test the technology and determine feasibility.

Ultimately, this will result in the installation of life-saving technology that is unobtrusive to safe drivers on new vehicles. Once implemented, it will be the most effective step taken in our nation's history to stop impaired driving, a preventable crime that kills more than 10,000 people every year. Last year, I also introduced our pilot partnership with Responsibility.org and Safe Night LLC to ensure Dallas nightlife venues are safe, inclusive, and accessible to all. We've had tremendous success with over 50 businesses certified in responsible alcohol service. We're excited to share that we will be expanding the program to New York City and beyond in the near future. Our commitment to sustainability doesn't stop at the corporate level. Each brand in our portfolio plays an important role as well.

Absolut launched the first iteration of their Out & Open campaign last year, a multi-year initiative to celebrate and support LGBTQ bars and restaurants to thrive in the face of a steady decline in their industry. With LGBTQ bars closing at an accelerated rate compared to non-LGBTQ bars, Absolut has partnered with the National LGBT Chamber of Commerce to make training programs around succession planning more accessible to LGBTQ business owners and protect the future of these sacred places. Of course, while we support external initiatives, it is equally as important that we are looking inward. In order to meet the growing demands of our business, we have invested in top talent across our organization. We're prioritizing diversity, equity, and inclusion as a business unit to make sure our employee population better reflects the diverse population of the consumers we serve.

Once we've recruited the best, we aim to retain them with a work culture that we refer to as wondrous. It exemplifies that together, we create magic. It's our people at the heart of our business, driving each of these successes. Everything I share today is in service of the idea that I began with. We are making strategic, thoughtful investments that work harder and issue more of a return for our business. Whether it be our brand strategies, innovations, creative campaigns, or sustainability initiatives, each decision is made with our full portfolio, our business, and our people in mind. I am confident that today's presentation confirms for you that Pernod Ricard North America is making incredible progress on our journey to sustainably beat the market and to lead the industry both in value and values.

We're delivering strong results, and our relentless focus on innovation, creativity, and responsibility has set us up well for sustainable growth over the long term. I would be remiss not to mention that our progress on this journey would not be possible without the over 1,000 employees who make up the Pernod Ricard North America team. We have built world-class teams with top talent from both within our industry and outside of our industry, and they continue to deliver. Everything you've seen today and everything we continue to do throughout the year is thanks to their passion, commitment, and unwavering dedication. It is what motivates me every single day to push further, dream bigger, and deliver more in service of our consumers, our customers, our communities, and yes, you, our investors. Thank you.

Powered by