FRANCE. Pernod Ricard has announced the signing of a contract with the Kingdom of Sweden for the acquisition of 100% of the shares of the Vin & Sprit Group (V&S), the owner of Absolut vodka. The acquisition does not include V&€™ 10% interest in Beam Global Spirits & Wine, Inc.
Pernod Ricard Chairman and CEO Patrick Ricard said: “The acquisition of V&S by Pernod Ricard is a fantastic opportunity and represents our third transformational acquisition since the Seagram and Allied Domecq transactions. Absolut is an exceptional brand. Its integration within our portfolio of premium brands combined with the strength of our worldwide distribution network paves the way for outstanding growth prospects. We become thus the co-leader of the global wine and spirits industry.”
Absolut is “a unique asset which perfectly complements Pernod Ricard’s portfolio of premium brands,” the company said.
 |
“Absolut is an exceptional brand. Its integration within our portfolio of premium brands combined with the strength of our worldwide distribution network paves the way for outstanding growth prospects“ |
Patrick Ricard Chairman and CEO Pernod Ricard |
Absolut is the number one premium vodka brand worldwide with around 11 million 9 litre cases sold in 2007. Pernod Ricard said: “It is an iconic brand whose influence goes far beyond the wine & spirits universe. It is one of only four international spirits brands in the world which sells more than 10 million cases a year and has a specially attractive growth profile (+9% volume growth in 2007).
“In the United States, Absolut is the top premium spirits brand, selling more than 5 million 9 litre cases. It has a unique brand image built around values of creativity, innovation and cultural leadership.
“In the rest of the world, with close to 6 million cases sold in 2007, Absolut is one of the most global brands in the industry with a significant presence in all the continents and a strong perception as a leader in the premium vodka category.
“Absolut fits perfectly with Pernod Ricard’s strategy and further enhances the strength of our premium brands portfolio, complementing Chivas, Ballantine’s, The Glenlivet, Jameson, Martell, Beefeater, Ricard, Malibu, Kahlua, Havana Club, Mumm, Perrier-Joüet, Jacob’s Creek and Montana.”
Pernod Ricard said the acquisition of V&S also provides Pernod Ricard with a leading position in the Nordic wine & spirits market through its portfolio of local brands. In addition, V&S also brings other attractive opportunities, notably Cruzan rum, a dynamic brand in the United States (circa 600,000 cases sold in 2007 up +27%) and Level, the number 4 brand in the super-premium vodka category in the US.
CO-LEADER WITH DIAGEO IN WINES & SPIRITS INDUSTRY
With the acquisition of V&S, Pernod Ricard said it becomes the co-leader in the global wine & spirits industry with:
– A global spirits volumes of 91 million cases;
– The number 1 position in premium spirits with a 27% market share.
In the US, the largest spirits market worldwide, Pernod Ricard’s position increases from number four to number two with a market share of close to 14%. V&S brands are currently distributed in the US by Future Brands (a joint venture held 49% by V&S and 51% by Fortune Brands) through a distribution agreement currently in place until the beginning of 2012.
From an operating stand point, V&S controls the marketing and A&P strategy for its brands. Furthermore, Absolut distributors are already largely aligned with Pernod Ricard’s distributors in the US, the company said.
In the rest of the world, Absolut will benefit from the strength of Pernod Ricard’s globally integrated distribution network, both in mature Western European markets as well as in high-growth emerging regions.
Excluding the US and Nordic countries (and including travel retail), V&S’ brands are currently distributed through Maxxium, a joint venture between V&S, Fortune Brands, The Edrington Group and Remy Cointreau, each partner having a 25% shareholding. Pernod Ricard said it will exit Maxxium within two years from closing for a low contractual cost.
The company said: “Pernod Ricard will therefore enhance the growth of Absolut in every region by combining its role as a brand-owner and its global footprint in conjunction with the existing distribution efforts of Future Brands and Maxxium.
“Pernod Ricard will immediately reap the benefit of Absolut’s presence in its portfolio. The acquisition of V&S will result in the end of the Stolichnaya distribution contract which Pernod Ricard will continue to perform during a short transitional period until SPI identifies a new distributor.”
Pernod Ricard said that the acquisition will reinforce its growth profile and will generate significant value creation for shareholders. The impact of the transaction on the earnings per share, excluding non-recurring items, is expected to be neutral in year one and significantly positive thereafter.
The return on investment should exceed Pernod Ricard’s cost of capital by year four at the latest, it said.
Pernod Ricard is confident the transaction will be completed during summer 2008 after receiving the necessary regulatory clearances.
Managing Director Pierre Pringuet, added: “We are eager to welcome the V&S teams into the Pernod Ricard Group. The integration will be made easier by our decentralised organisation model. The integrity of the V&S group will be maintained and it will become a new “˜brand-owner’ and a distribution platform for the Group in Nordic countries.”
[comments]
Your post will appear – once approved – in The Moodie Forum on our home page
MORE STORIES ON PERNOD RICARD
Asian duty free “˜dynamic’ as Pernod Ricard posts excellent first-quarter results – 30/10/07
Jameson launches Rarest Vintage Reserve, the brand’s “most exclusive expression to date” – 18/10/07
