entreprendre No 55 • Spring-Summer 2010

Transcription

The Pernod Ricard Magazine No 55 • Spring-Summer 2010
Latin
America
New Land of Growth
STRATEGY
Interview
with General Management
GUEST
Pascal Lamy
Director-General of the WTO
FEATURE
Latin America,
New Land of Growth
ADVERTISMENT PUBLISHED OUTSIDE OF FRANCE
n°55
Spring-Summer 2010
6
STRATEGY
Interview with General Management
12
sHAREHOLDERS
GROUP NEWS
14
GUEST
Pascal Lamy
Director-General
of the World Trade
Organization (WTO)
28
fEATURE
dossier page 18
18>45
LatinAmerican
Dynamism
Latin
America,
New Land
of Growth
30
Mexico
34
Brazil
38
36
Social
and Environmental
Responsibility
Argentina
Companies
at the Forefront
news
46
news
news
3
editorial
4
Dear Readers,
After Entreprendre’s successful issues
highlighting the history of spirits,
followed by vodka and its iconic brand,
ABSOLUT, Pernod Ricard invites you
to discover its ongoing expansion into
international markets. In this issue,
our subsidiaries in Mexico, Brazil and
Argentina open their doors to tell you
about the growth of Pernod Ricard’s
wines and spirits in Latin America.
Also, as you’ll find out in the interview
with General Management, Pernod
Ricard’s teams have been hard at work
in recent months to define an important
new ambition for the Group. In line
with Entreprendre’s mission to help
you understand our activities and
our strategic challenges, we offer you
a full look at it inside.
Finally, our sincere thanks go to everyone
who took part in our readership survey.
This exercise gave us a clear picture
of your expectations so that we can
work better to meet them, starting with
this issue. Among other new features,
we’ve introduced a new Forum for
personalities of the contemporary world,
added information on our commitments
to Corporate Social and Environmental
Responsibility, and expanded the section
on the performance of the share price.
We hope you enjoy reading this issue.
The Editors
5
créate STRATEGY
de
Interview with General Management
“Créateurs de convivialité”: Such is the new slogan
adopted by Pernod Ricard in April 2010 to communicate
the role the Group intends to play from now on in the
Wine and Spirits industry. The wording to express this
vision follows an intense period of study led internally
in recent months. With it, Pernod Ricard proclaims its
mind-set: that of a leader, a key change agent in the
industry, and a driver of growth in the sector.
6
urs
To better understand the main implications of this
vision, Entreprendre interviewed Pierre Pringuet,
Chief Executive Officer, and his Managing Directors.
Selected excerpts follow
.
Pierre Pringuet
Chief Executive Officer
Thierry Billot
Managing Director,
Brands
Bruno Rain
Managing Director,
Human Resources
and Corporate Social
Responsibility
Michel Bord
Managing Director,
Distribution Network
Gilles Bogaert
Managing Director,
Finance
7
Six months ago
Pernod Ricard
launched a major
company project,
called “Agility”,
which touches on
all Group functions.
What are the findings
of this project?
Pierre Pringuet >
“Agility” has
primarily served to
reaffirm our key strength,
which is our culture.
We’ve found a new and
clearer way to express
this. There are three values at its core: a spirit of
entrepreneurship, mutual
trust and a strong sense of
ethics. These values make eminent sense when expressed in a unique organisation, the Pernod Ricard
“model”, founded on the principles of decentralisation and conviviality.
Our culture can be summed up in one word:
Passion. It is passion that unites us and guides our
entrepreneurial drive. It’s with passion that we must
face the future, using it to achieve the important
goal of capturing leadership. Leadership is
above all a mindset: the leader is the one
who innovates, who changes the rules of the
game.
“Agility” finds expression through the combination
of six keywords: focus, speed, passion,
creativity, excellence and responsibility,
which fit together like the pieces of a puzzle,
and give the overall plan its coherence. New
approaches will be implemented throughout the
Group's businesses to translate these catchwords
into action. Specifically, over 30 projects have been
launched within the Group’s key functions and are
now in their completion stages. Here, I’ve asked
the members of our General Management team
to expand on the meaning of these words.
focus
STRATEGY
Thierry Billot > “Focus” means continuing
to concentrate our efforts and
resources on the industry’s best opportunities.
This has led us to redefine the contours of our
brand portfolio comprised of 18 priority brands
divided into two groups: 14 priority spirits and
champagne brands and 4 priority wine brands.
Industry projections show that whisky and vodka
will remain the major growth drivers of our
business. We have thus sought to highlight two
brands that are today considered “global icons”:
ABSOLUT and Chivas Regal. Regrouping our
vodkas under the same Brand Company will
enable us fully to seize this opportunity.
Accelerating the growth of our other key brands
is also crucial. So in addition to our two iconic
brands, we’ve reorganised our portfolio of key
brands:
• 7 Premium spirits brands: Jameson,
Ballantine's, Havana Club, Kahlúa, Ricard,
Malibu and Beefeater.
• 5 Prestige spirits and champagne brands:
Martell and Perrier-Jouët, The Glenlivet,
GH Mumm and Royal Salute.
• 4 Premium wine brands: Jacob’s Creek,
Montana, Campo Viejo and Graffigna.
These wines will now be managed by a single
organisation in order fully to leverage the growth
potential of wine, especially amongst a female
target market.
Lastly, key local brands have a major role to
play in capturing the middle classes, which are
expanding rapidly in emerging markets. There
are also 18 such brands: 100 Pipers, Olmeca,
Clan Campbell, Seagram’s Gin, Ramazzotti,
Blenders Pride, Pastis 51, Wiser’s, Something
Special, Royal Stag, ArArAt, RuaVieja, Montilla,
Becherovka, Passport, Wyborowa, Suze and
Imperial.
Bruno Rain > As it relates to Human
Resources, the concept of “focus” means
focusing on what makes us strong: our employees.
Our priority is to have the talent we need on
board, and real leaders to lead them and help
them to grow. Our aim is to bring about a
genuine culture of leadership to stimulate
individual performance. Such a culture should
allow our employees to rise through the ranks
and guide them in their careers. We will further
this aim through the standardised rollout of
specific Human Resources tools.
8
passion
speed
Michel Bord* > In a context
that has changed considerably
in recent years – whether in respect of
the size of the Group, our brand
portfolio, or even the competitive
environment – responsiveness and
speed are essential strengths for
outperforming our competitors.
It is imperative that we be the first
to anticipate market trends and meet
our consumers’ expectations. We
must be faster in taking decisions
and implementing them, limiting the
number of people involved, and thus
preserving the responsiveness that has
historically been the key to the success
of Pernod Ricard and its decentralised
business model.
To achieve this, we will step up our
efforts to share best practices within
the Group. Sharing experiences enables
us quickly to apply targeted solutions
to specific problems. And through
our 19,000 employees working in
70 subsidiaries worldwide, we have an
inexhaustible store of knowledge and
expertise.
Speed in anticipating, taking decisions
and executing them reflects first
and foremost a spirit of boldness,
enthusiasm and passion.
Bruno Rain > At Pernod Ricard,
we are all passionate Entrepreneurs.
We live this passion through our brands
and our business and transmit it to our
customers and consumers. To cultivate
this passion, we’ve introduced two main
courses of action.
First of all, we want to build what we
call the Pernod Ricard University.
More than a training centre, this will
be a think-tank which will spread the
Pernod Ricard spirit both inside and
outside the organisation. In addition to
being a “melting pot” for integrating new
employees and transmitting the Group’s
culture in a real and immediate way to
all employees, it will serve as a place for
dialogue and exchange, and for debating
ideas concerning all of the Group’s areas
of expertise. As the preferred platform
for training, it will serve to accelerate
the development of expertise within
the Group.
In addition, we want to go further in
building the “Pernod Ricard” brand
* After twenty years with Pernod Ricard,
where he was a key architect of its international
expansion, Michel Bord has decided leave the
Group, effective 30 July 2010.
and have defined three objectives to do
so: raise the Group’s visibility beyond its
historical markets, enhance its reputation
by targeting themes that go beyond its
financial performance, and increase its
attractiveness to the financial community,
institutions, NGOs, the media, our partners
and new talent. We also want to go even
further in strengthening our employees’
sense of belonging to our Group. Our
“Pernod Ricard” trademark, which includes
the new tagline “Créateurs de Convivialité”
will thus evoke all the fundamental qualities
we associate with the Group and its
products: excellence, authenticity, origin,
expertise and responsibility.
9
excellence
creativity
strategy
Thierry Billot > Extending
Pernod Ricard’s reach in the
world is our daily obsession and we
achieve it by exploring new segments of
consumption and winning over new
customers. Creativity and innovation
drive this ambition.
The environment has changed. The
growth of the Internet means it is now
the consumer who decides the kind of
relationship he or she wants to create
with a brand.
Creativity is essential to establish
this relational promise and meet
consumers’ growing expectations.
Expressing a brand’s inspiration and
differentiation, such creativity is an
essential component of promoting a
Premium and Prestige portfolio. It is
also a hallmark of the leadership culture
and mindset.
Curiosity and openness to the world
feed creativity. This concerns all fields:
not just Sales and Marketing, but
Human Resources, Production, and
Finance as well.
Bruno Rain > To continue to
nourish our creativity, we will
rely on the diversity of our cultures,
our origins and our sensibilities. This
diversity is one of the Group’s great
assets and it reflects the melting pot
that characterises our contemporary
society. We must continue to cultivate
it and make it a competitive advantage.
10
Gilles Bogaert > Excellence is
the hallmark of leaders. It drives
them to make their mark, to innovate,
to be bold; in a word, to be a benchmark. It takes talent, but also hard work
and organisation.
No one can excel in everything. You
have to target the key issues where you
can make a difference. This means,
firstly, to be able to work in a crossfunctional way and, secondly, to leverage our strengths by promoting the
sharing of best practices (which requires
speed as well as excellence), and making
use of our experts.
The goal of excellence concerns
all functions in the business. It goes
beyond the need to cut costs, making
growth its primary aim.
Striving for excellence means maximising the efficacy of points of contact with
our stakeholders: consumers (including
leveraging the tremendous opportunity
of new digital technologies), customers
(service quality, control of the shopping
experience) and of course our shareholders, for whom value creation is our
ultimate goal.
Responsibility
Pierre Pringuet > A company
today is no longer judged solely
on its business performance, but on its
social commitment as well. At Pernod
Ricard, we are convinced that acting
responsibly is integral to our
s t r a t e g y . This imperative of
responsibility is encoded in the Group’s
DNA from its founding, and it will
continue to guide all of our future
actions.
Bruno Rain > Our social
responsibility policy must be
strong and consistent. It targets two
priorities: t h e p ro m o t i o n o f
responsible drinking and, within
our operating framework, respect
for the environment.
Initiatives by our subsidiaries in
these areas will now be measured
by performance indicators. We are
looking at projects that will involve
the unified effort of all 19,000
employees of the Group. The idea is
simple: make each of our employees
an ambassador for our commitment to
Social Responsibility, and better yet, a
real actor in the cause.
We are also strengthening our
organisation in this area. It has
thus been decided to establish an
Advisory Committee that represents
the Group’s functions and markets
across the board, and to expand my
responsibilities to those of Managing
Director of Human Resources and
Corporate Social Responsibility.
If we were to sum up our vision for
responsibility, it would be, “Around
the world, we share responsibly and act
sustainably.”
Pierre Pringuet >
Agility is thus more
than a company project:
it’s a new way of expressing
and executing our role.
Agility has from the beginning been a collaborative
project involving a large
number of Group executives. We are all intent on
translating the selected
proposals into immediate action:
Implement our new priorities in terms of brands
and geography.
Make innovation and creativity a core feature of
our business.
Seek speed in taking decisions and excellence in
their execution.
Develop a culture of leadership and performance.
Express our pride in working for Pernod Ricard,
and make Pernod Ricard our number one brand.
Reaffirm our commitment to social responsibility.
“Our culture is
the cement which
ensures our success:
we will leverage
this asset by giving
it new momentum
as we head
purposefully
into the future.”
11
Shareholder Information
share price chart
business update
Pernod Ricard share price measured against the CAC 40 from 30 June 2009 to 30 June 2010 (Close)
2009/10 Financial Year
PERNOD RICARD
CAC 40
e
63.98
Excerpts from the press release of 22 July 2010
Over the full financial year 2009/10, organic
growth reached 2%*.
3,140.44 points
3,442.89 points
sales
After taking into consideration a negative foreign exchange effect
of around 1% (which turned positive over HY2) and a negative
Group structure effect of 3%, relating mainly to the disposal of
the Wild Turkey and Tia Maria brands, 2009/10 sales reported a
slight decline of 2%.
For the full 2009/10 financial year, Pernod Ricard is targeting
organic growth in profit from recurring operations of
between 3%* and 4%*
e
(compared to about 3%* previously), while having increased
advertising expenditure as planned.
43.9902
june
2009
JUly
2009
August
2009
september
2009
october november
2009
2009
december
2009
JANuary
2010
February
2010
MARch
2010
ApRIL
2010
may
2010
* on a like-for-like basis
share price performance
comparison
Pernod Ricard’s share closed at €64 on 30 June 2010, for a yearon-year increase of 45% since 1 July 2009, significantly outpacing
the CAC 40 (up 10%).
One-year stock market performance
At the start of July 2009 Pernod Ricard followed the falling market trend, and hit a low point with shares
closing at €43 on 9 July 2009. The Group’s trading statement of 17 July 2009 reassured investors about
the resilience of its sales and launched the share’s upward climb. The sale of Tia Maria, announced
27 July further boosted market confidence. Pernod Ricard’s share price continued to rise, reaching
€60 on 7 December 2009. It hovered around this level until 17 February 2010, confirming its defensive
status in an environment disrupted by concerns over Greek debt and the risk of an overheating Chinese
economy. On 18 February, Pernod Ricard announced half-year results in line with forecasts, and then
on 11 March, successfully issued a €1.2 billion convertible bond. The share again took off, to reach its
peak for the fiscal year of €67.50 on 13 April 2010. Late April and the month of May were marked by
renewed concerns about European sovereign debt, and the share corrected, in line with the markets,
to hit its low for the year of €59 on 25 May 2010. In early June, rumours of an imminent revaluation
of the Chinese Yuan and the announcement of strong annual results by Rémy Cointreau provided a
boost to the sector and Pernod Ricard ended its financial year at €64.
During the same period, the Group’s main competitors
performed as follows:
shareholding*
diary
3.2%
U.S. institutional investors
7.2%
French institutional investors
9.1%
Société Paul Ricard
Individual and misc. shareholders
Directors + Executives + Employees + Treasury Shares
* At 31 December 2009
+45%
+22%
Rémy Cointreau +70%
Campari +42%
Brown Forman +33%
Fortune Brands +13%
Diageo
2 September 2010
2010/11 First Quarter Sales
21 October 2010
9%
Groupe Bruxelles Lambert
U.K. institutional investors
Pernod Ricard
2009/10 Annual Sales and Results
31.9%
Other foreign institutional investors
12
june
2010
11%
14.3%
14.3%
2009/10 Combined General Meeting
10 November 2010
news
Group
In every field, Pernod Ricard makes continuous improvement a focus of its growth strategy. All functions throughout the
company are involved in this approach, which is a constant source of innovation. Such innovation is regularly rewarded by
expert panels which recognise the technological advances implemented by the Group to improve its processes and performance, and to reflect its commitment to social and environmental issues and its determination to create the best working
environment for its employees. Below is a roundup of the latest news highlighting the Group’s commitment in these areas.
2
3 1
SEEKING PERFORMANCE ACROSS ALL FUNCTIONS
The rollout of Oracle’s Business Intelligence solution (a tool enabling the
operational management and business analysis of subsidiaries) in the Pernod
Ricard Group was hailed in December 2009 by the 2009/2010 Oracle Innovation
Awards which recognise companies that have found innovative ways to implement
solutions by Oracle, the world's leading business software company. Beyond its
technological aspects, this award recognises a major initiative undertaken at the
Group level to share best practices and skills in order to reuse work done by
some subsidiaries of the Group to benefit other entities, which cuts lead times for
implementing programmes and thereby reduces costs.
2
In the field of Communications, Pernod Ricard was honoured in December
2009 by Stratégies magazine, receiving the Grand Prize in the “Corporate
Publications” category for Entreprendre, its magazine for shareholders
and employees. In February 2010, the Group received another publishing
award for its 2008/2009Annual Report, this time winning the silver medal at the
Top Com Awards.
2
3
In the legal field, the Group distinguished itself in March 2010, receiving
awards for “Intellectual Property Team of the Year” at the European
Counsel Awards and for “Intellectual Property Director of the Year” at the
Trophées du Droit et de la Finance [Law and Finance Awards]. These awards
demonstrate the effectiveness of Pernod Ricard’s Intellectual Property team in
terms of organization and the actions it undertakes to protect and defend the
Group’s trademarks and other intellectual property rights.
4
A COMMITMENT TO RESPONSIBILITY ON A GLOBAL SCALE
4
5
Pernod Ricard China’s ongoing efforts in Social and Environmental
Responsibility, particularly through its pioneering outreach programme
to prevent drink-driving, were recognised in January 2010 by the widely
publicised award for “Outstanding Socially Responsible Business in China 2009”
at the 5th annual Forum of Responsible Businesses.
In Korea, in March 2010 Pernod Ricard launched the “Smart Driving
Foundation” dedicated to the fight against drink-driving. This initiative is
aligned with the responsible drinking policy which the Group is committed to
promoting. The Foundation has been set up to organise campaigns to raise public
awareness in alliance with other industry members, as well as with institutional
partners such as the national police force and the road safety authority.
5
6
With its procurement project to buy “fair trade” and organic aromatic plants
in India for the production of Amaro Ramazzotti, Pernod Ricard Italia is
combining sustainable development and social responsibility. Small growers,
ensured of a steady, long-term outlet, will also have the opportunity to promote
their goods for export. In addition, access to micro-loans and rural development
projects will support the creation of micro-businesses by these growers.
6
CONVIVIALITY: AN INTANGIBLE VALUE
8
7
7
In its first appearance on the list of “Best French Companies to Work
For”, established yearly by the Great Place To Work® Institute, the Ricard
company joined the Top 10 in 2010 (ranked 6th). Amongst answers to
58 questions put to all staff, 86% of employees said that “Ricard really is a great
place to work”, and 94% said that they “are truly proud to work for Ricard”. These
results recognise the company’s strong corporate culture and commitment to
its founding values.
8
In publishing the ranking of the best employers in the Czech Republic
in 2010, the firm Hewitt Associates placed Jan Becher (Pernod Ricard’s
subsidiary there) amongst the ten best employers of the year in the category
of small and medium-size companies.The level of employee commitment and
motivation stands at nearly 70%, reflecting the strength of the Human Resources
policies implemented by the company.
13
GUEST
For the first time, Entreprendre offers a forum to an outside personality. Pascal Lamy, DirectorGeneral of the World Trade Organization since 2005 and former European Trade Commissioner,
discusses the changing Latin American market, the trade agreements in place, the main
challenges for the region and the role that international groups like Pernod Ricard can play.
WHAT CHALLENGES
LIE AHEAD FOR
latin
america?
Interview with Pascal Lamy, Director-General of the WTO
H ow
would you describe
t o d a y ’s m a r k e t i n L a t i n
America, especially in Mexico,
Argentina and Brazil? How
has it changed in recent
years?
Pascal Lamy > Latin America wasn’t
spared by the global economic crisis and
every country was hurt by its impact:
the region’s gross domestic product fell
3.5% in 2009. But it is on the road to
recovery from the shock. Sound economic
policies combined with macroeconomic
reforms have enabled it to restart its
economy. These efforts are unlikely to
compromise the region’s goals of long-term
growth. A return to growth is expected
in 2010, although its rate will remain
below the 5% seen there between 2004
and 2008.
14
What is the degree of Latin
America’s openness to trade?
In what direction would the
WTO like to see these markets
evolve?
Pascal Lamy > Over the past twenty
years, the countries of Latin America have
become increasingly integrated with the
rest of the world economy. The region
as a whole has rejected protectionism.
However, the opening of South American
markets has mainly happened through
unilateral action or preferential trade
agreements. Doha(1) negotiations offer a
unique opportunity for Latin American
countries to maximise their efforts to open
trade.
H ow
do you view the role
of South America, with its
highly diverse countries and
positions, in the Doha
Round?
Pascal Lamy > In general, the Latin
American countries are very active in the
WTO. They participate fully in the Doha
Round and help to advance negotiations.
They don’t hesitate to use the dispute
settlement system(2). Brazil, like India and
China, has become a major player in the
WTO. Some countries in the region, like
Chile, Peru and Mexico, have made trade
a focus of their development strategy,
with some success.
M ore
specifically, in Doha
Round negotiations, the
Mercosur(3) countries seem
divided between their
agricultural interests, which
• Pascal Lamy is a graduate of HEC
Paris International Business School,
Institut d'Études Politiques (IEP) and
École Nationale d'Administration
(ENA). He began his career in the
French civil service at the General
Inspectorate of Finance and the
Treasury Department. He then became
an advisor to Finance Minister
Jacques Delors, and subsequently
to Prime Minister Pierre Mauroy.
• In Brussels from 1985 to 1994,
Mr Lamy was Chief of Staff for
the President of the European
Commission, Jacques Delors,
and G7 Sherpa.
• In November 1994, he joined the team
in charge of rescuing the French bank,
Credit Lyonnais, and later became
the bank’s Managing Director until its
privatisation in 1999.
• F rom 1999 to 2004, Mr Lamy was
the European Commissioner for Trade
under Romano Prodi.
• A fter his stint in Brussels, he spent
a brief sabbatical period as head
of the non-profit “Notre Europe”,
a think tank working on European
integration. He also served as an
Associate Professor at the Institut
d'Etudes Politiques in Paris and
advisor to Poul Nyrup Rasmussen
(President of the European
Socialist Party).
are p ro -trade , an d t h e ir
industrial interests, which are
anti-trade. How do you
assess the gains and losses
that these countries can
expect from this round?
Pascal Lamy > All these countries
contribute significantly to the negotiations,
both individually and as members of
developing country coalitions.
As a group, Mercosur countries have both
pro-trade and protectionist interests in
industry and agriculture. Individually, they
have different sensitive sectors they want
to protect, which complicates defining
common ground for them within the
WTO. However, all these countries will
benefit greatly from an agreement that
will support the economy and world trade
overall.
M e rc o s u r
is sometimes
perceived in Europe as a
major threat to the future of
EU agriculture. How would
you respond to this claim?
Pascal Lamy > This is a matter
between two WTO trading blocs, so
I have to remain neutral. But I have
long said that I believe sound European
strategy in this sector is to emphasise a
value-added approach.
From your point of view, would
failure to conclude the Doha
Round likely revive regional
negotiations between Mercosur
and other countries or groups
of countries in the world,
particularly the E.U.? For the
WTO, as an institution that
oversees the multilateral system
of international trade, is this a
risk, an opportunity or an
inevitable development?
Pascal Lamy > The Mercosur countries
have always negotiated regional preferential
agreements in Latin America (Chile and
Bolivia in 1996) and in other regions of
the world (India and the Southern African
Customs Union in 2004). Other agreements
are being negotiated, for example with
Turkey and the Gulf Cooperation Council
Customs Union. These agreements have
been developed independently of WTO
efforts.
On the broader question of the proliferation
of regional trade agreements, I could answer
"yes" to almost all the points raised in your
question. Yes, there is a risk: the very principle
of non-discrimination and its corollary,
15
GUEST
World trade
should rise
by almost 10%
in 2010.
the most-favoured-nation provision,
could be thrown into doubt, at least for
some WTO members. And yes, it’s an
opportunity, which WTO members
have also well understood and repeatedly
seized. They did so first in 1996, by
establishing the Committee on Regional
Trade Agreements (i.e., preferential
agreements), a body that oversees the
work of the WTO in this area. Then again
in 2001, at the launch of the Doha Round:
the Members agreed to be involved in
negotiations aimed at clarifying and
improving the WTO’s disciplines and
procedures as they apply to regional
trade agreements. Most recently, in
December 2006, Members adopted a new
transparency mechanism for RTAs, which
significantly improves the information
provided to Members and the public in
general on the agreements in force.
16
What do you think of South
America’s conduct in regards
to trade since the beginning
of the financial crisis of 2008?
Has the WTO noted any
protectionist tendencies?
Pascal Lamy > The global financial
crisis was unprecedented in the history
of GATT and the WTO. The collapse
of aggregate demand that followed in
Europe and North America caused
a global economic recession that
resulted in a drop of more than 12%
in the volume of goods traded in 2009.
Developing countries, including in South
America, were not spared, and remain
particularly vulnerable to a further
contraction in their exports. Trade in the
countries of South and Central America
declined in 2009: exports of goods fell by
24%, bringing a long period of export
growth to a halt. According to our latest
forecasts, world trade should rise by
almost 10% in 2010. The countries of
South America are well-positioned to
profit from this recovery.
The magnitude and speed of the global
economic crisis could have triggered an
acute protectionist backlash. This was
not the case: despite some over-reactions,
the global economy is about as open to
trade today as it was before the crisis.
Trade restrictions had no responsibility
for the outbreak of the crisis and have
played a minimal role in deepening the
global recession.
It is true that, as might be expected,
some protectionist moves were seen
in reaction to the impact of the crisis.
However, no country sought to protect
itself through massive trade restrictions
or protectionism, nor were there
(1) Doha Round: The Doha Round was
established by the Fourth Inter-Ministerial
Conference organised by the WTO in November
2001 in Doha, Qatar. The Doha declaration was
the sequel to the Inter-ministerial Conference,
which established a mandate for negotiations on
various topics (including agriculture, services,
non-agricultural products, the register of
geographic denominations of wines and spirits,
etc.). These negotiations have so far not been
concluded.
This round of negotiations is intended to allow
developing countries, and in particular the
least developed among them,to increase their
participation in world trade in order to boost
their economic development, including through
improved access to markets, more equitable trade
rules, and programmes of technical assistance and
focused capacity building which include longterm financing availability. (Source: WTO)
(2) Dispute Settlement Body: Composed of all
WTO member governments, usually represented
by ambassadors or officials of equivalent rank.
It is currently chaired by H.E. Yonov Frederick
Agah (Nigeria).
The Appellate Body, established by the Dispute
Settlement Body, is a permanent body composed
of seven members broadly representative of the
WTO membership. Its members are appointed
for four-year terms. They must be individuals
with recognised authority in law and international
trade who are not affiliated with any government.
(Source: WTO)
(3) Mercosur: A Customs Union established
in 1991 composed of permanent members
including Brazil, Argentina, Paraguay, Uruguay
and Venezuela (integration process underway for
the latter). (Source: Mercosur)
notable cases of trade retaliation. While
some countries have tightened trade
restrictions, it is encouraging to note
that their governments are mindful
of the beneficial role that loosened
trade barriers can play in the current
circumstances, by lowering consumer
prices and production costs, stimulating
aggregate demand and helping to reverse
the contraction of world trade.
What could be the role of a
Group like Pernod Ricard in
deepening commercial ties
with Latin America and what
benefits can be expected
from it?
Pascal Lamy > The WTO has proven
its worth in the crisis. Its rules have
allowed it to contain any protectionist
moves, acting as an insurance policy
against protectionism both for its
members and for companies. The fact
that the system held fast is proof of
its value and of the need to reinforce
it, particularly in the developing
countries. The Doha Round will make
for improvements in the international
trade system.
The private sector should support the
conclusion of the Doha Round, which
will lead to a greater opening of the
international marketplace, framed by fairer
rules, which will bring greater stability
and greater certainty in trade affairs, from
which companies will benefit.
What are the main economic
Pascal Lamy > The region is moving
forward economically. But Latin
American countries are still developing,
and some must meet challenges
relating to poverty, social inequality
and infrastructure. The financial crisis
has hurt Latin America. In part it has
interrupted a cycle of growth begun in
a number of countries which have seen
portions of their population fall back
into poverty. Foreign direct investment is
thus very important for such countries. It
stimulates their economies, creates jobs
and growth, and thereby reduces poverty.
Major foreign groups can also support
these countries in preserving a rich and
diverse environment.
and social challenges ahead
for Latin America and how can
international groups contribute
to addressing them?
17
FEATURE
Latin America
L atin America
newla
of Gro
18
land
rowth
19
FEATURE
Latin America
Latin America Takes Off
Latine
America
Takes
off
Interview
Philippe Dreano
Chairman & CEO, Pernod Ricard Americas
Latin America withstood the
crisis better than in the past.
Why is this so?
Philippe Dréano > The countries of
Latin America were hit by the crisis relatively late. They withstood it better overall and will recover from it sooner than
Europe. In Brazil and Mexico, domestic
consumption has remained strong overall, with per capita debt levels well below
those of the United States. These two
countries have the largest trade surpluses
and have accumulated significant foreign
exchange reserves. This helped to cushion
the shock.
Is Latin America a homogeneous or more heterogeneous market for spirits?
Philippe Dréano > It’s more homogeneous than what I expected when I
arrived in the region. In most countries, local products such as cachaça in
Brazil and tequila in Mexico represent,
in volume, the largest segment of the
spirits market. At the same time we see,
as with Asia, a strong demand for imported Premium international brands,
which primarily benefits whisky and
vodka. Both these categories are associated with the urban upper middle
classes. However, in South America
off-premise sales dominate on-premise,
unlike in Asia, for example, where spirits
are mainly consumed in restaurants,
bars and nightclubs. I should point out,
though, that in Brazil one can purchase
a bottle in a shop for consumption in a
restaurant, and not just at home. This
remains an “off-sale” purchase, and our
business strategy and brand promotion
take this into account.
(1) The Caribbean, Central and South America,
Venezuela, Brazil, Argentina, Cuba, Chile, Peru,
Uruguay, Ecuador, Bolivia, Paraguay and Colombia.
20
ow is this market changH
ing?
Philippe Dréano > Local products,
which generally have low added value
per unit, are stable and in some cases
in decline. With rising living standards
linked to economic growth and the
subsequent development of the middle
classes, consumers aspire to gain access
to global brands. And these brands are
growing fast, especially given the relatively weak base they are starting from,
compared to the global market.
hat is behind the success
W
of whisky and vodka?
Philippe Dréano > This success is
primarily one of branding. It is the
result of investments that we, and our
competitors, are making to develop
strong, iconic brands such as Chivas
Regal, Ballantine’s and ABSOLUT. The
choice of brand is more important to
that of a product or category. Those in
the “young adult” segment are as apt to
drink whisky as vodka – it depends on
the occasion. In Mexico, where brown
spirits are considered manlier, men tend
to drink whisky when they are together.
But with their girlfriend or wife, they
will just as readily drink vodka if she
prefers it, which is usually the case. In
Brazil, vodka is increasingly replacing
cachaça.
hat position does Pernod
W
Ricard currently hold in
Latin America (1) and Mexico?
Philippe Dréano > We are the worldwide volume leader, and are number two
in the international brands segment.
This is the culmination of the Group’s
history. When we bought Seagram in
2001, we found local brands in the portfolio that are very strong in Brazil, such
as Montilla rum, Natu Nobilis whisky
and Orloff vodka. They represent a
large share of the volumes sold in the
country and of our profits. Similarly,
with the acquisition of Allied Domecq
in 2005 we acquired the Mexican brandies Presidente and Don Pedro, which
are still very strong locally.
What is your strategy now for
these local brands?
Philippe Dréano > Today they
represent high sales volumes and profits,
but their market is generally constant.
We nonetheless count on them to provide
us with the critical mass to maintain the
very strong proprietary distribution
networks supporting the growth of our
Premium brands. We thus continue to
invest in distributing and marketing
these products, but our efforts give
priority to our strategic brands, which
offer tremendous potential for growth.
hat are t h es e pr ior it y
W
brands and what is their
potential?
Philippe Dréano > Across the
continent, in first place are ABSOLUT
vodka and our whiskies Chivas Regal,
Ballantine's and Jameson. In the past,
the local affiliates we’d acquired were
prioritising local brands instead of
developing imported scotches which
were still very much in the minority.
We have corrected this. We are now
supporting these international brands
with substantial human, financial and
marketing resources. We intend to
build on the wealth of our range and
the power of our distribution network
to increase their market share. This
gives us two key levers to drive growth:
increasing our market share and
naturally rising sales linked to higher
living standards.
hat does the addition of
W
ABSOLUT to the brand portfolio do for you in Latin
America?
Philippe Dréano > The benefits are
twofold. First, ABSOLUT is gaining
because it is now distributed across the
continent through our broad-based
network: this means it has significant
room for growth. The brand also has
a very strong, positive image among
consumers. This really opens doors
at any bar where we want to gain a
foothold: it helps us to introduce our
other brands, on excellent terms. With
our Super Premium vodka Wyborowa
Exquisite and local brands such as Orloff
in Brazil, we now cover all segments of
the category.
I s there a place for spirits
other than whisky and vodka?
Philippe Dréano > The markets will
continue to evolve in the direction of
greater sophistication. We are thus
already laying the groundwork for categories such as cognac, with Martell, as
well as champagne and liqueurs, even if
these relatively small market segments
currently generate only small volumes.
produced spirits such as Blender's Pride
admix (whisky-based spirit). In exports,
we have two excellent wines produced
by different vineyards, Echart and especially Graffigna, which has the best
potential internationally. Graffigna
is today mainly sold in the U.S. and
the U.K. and in a few other countries.
Developing the brand abroad is now a
priority for us, which was not the case
under Allied Domecq.
Is responsible drinking a big
concern in South America?
Philippe Dréano > These countries
have recently acceded to the standards
of developed countries, so their awareness is still emerging. We nevertheless
intend to actively promote the Group’s
corporate social responsibility policy
throughout the region. In Mexico, we
are far in advance: our efforts, in particular through the Domecq Foundation,
set a real example. ■
atin America, particularly
L
Argentina, is a major wine
producing region in which
Pernod Ricard has a significant presence. What is your
strategy in this area?
Philippe Dréano > The Argentine
market is effectively dominated by
wine, with a spirits segment that is less
developed than in other large countries
like Mexico, Brazil and Venezuela.
Wine represents the lion’s share of our
sales there, although we also invest in
our key brands, our bitters and locally
21
FEATURE
Latin America
Fertile Ground for Spirits
Fertile Ground
for Spirits
crisis
The financial
could have
brought South America’s economies
to their knees, as happened during the
previous shocks of 1980 and 1990. Yet
the continent has already recovered,
confirming its status as the second most
dynamic economic region in the world
after Asia(1). In March 2010, the World
Bank again raised its economic growth
forecast for the region by 0.5 percentage
points, to 3% for the year. In Brazil, the
rate easily exceeds 5%. Even Mexico – after
being doubly impacted by the H1N1 virus
and the U.S. recession – is turning around,
with projected growth of more than 3% for
2010. With few exceptions, the economic
crisis effectively struck stabilised, healthy
economies. “Prudent management of
budgets and debt, flexible exchange rates
and trade surpluses in some cases”: such
is glowing portrait of the economies of
Brazil, Mexico, Chile, Peru, Colombia and
Uruguay, drawn by World Bank President
Robert Zoellick. Today it validates the
confidence of investors in the future of this
market of six hundred million people.
An increasingly significant middle
class • For the inhabitants of this
region, a return to growth means the
continued expansion of the middle
classes, a true phenomenon of the last
decade in countries that are practically
all democracies now. According to a
forecast study by the consulting firm
PricewaterhouseCoopers, in Sao
Paulo, more than four million people
have monthly incomes above €1,800
(4,500 reais). The dynamism of this
huge Brazilian metropolis will, within
15 years, make it one of the six richest
cities in the world and home to more
affluent consumers than Paris. Besides,
this is a Latin-American middle class
that aspires to consume, and doesn’t
hesitate to splurge. When it comes to
spirits, this translates to imported brands,
synonymous with quality and status.
Indeed, here as elsewhere, 1998-2008
saw a trend towards Premiumisation,
with the Premium segment (e.g.,
ABSOLUT, Ballantine's Finest, Havana
Club) growing at rate of nearly 3% per
year. Growth even surpassed 5% per year
in the categories of Super Premium (e.g.,
Chivas Regal, Wyborowa Exquisite) and
Ultra Premium (e.g., Martell VSOP,
Chivas 18-Year-Old)(2).
(1) Source: World Bank
(2) Source: Pernod Ricard Market View, based on
IWSR
Tequila,
cachaça,
pisco
… the quest for recognition
Tequila and its close cousin mescal are now protected by an “appellation of origin”
designation recognised under international treaty. In July 2006, the city of Tequila, which
lent its name to the most famous of Mexican drinks, and its agave-dotted landscapes
covering over 35,000 hectares of the state of Jalisco were declared UNESCO “Human
Heritage” sites. Tequila, the essential ingredient of the world-famous Margarita cocktail,
is a direct descendant of “pulque”, the nectar which is a gift from the gods according to
Aztec legend: under the heat of a lightning strike, an agave pina began one day to warm
and ferment...
Some 7,000 kilometres further south, on the Atlantic coast of Brazil, cachaça can’t lay
claim to such noble origins. It began as fermented sugar cane juice, made clandestinely
by slaves and scorned by their masters who preferred the wines of Portugal. Adopted by
the least advantaged social classes as the country developed, cachaça has remained a
“working class” spirit which is notably the base for the Caipirinha, the famous cocktail
made with crushed lime. Cachaça’s name changes according to state, city or any of its
thousands of small, artisanal producers: Here, it’s affectionately called pinga (droplet);
there, it’s branquinha, pinguinha, birita, gas, oleo... or, more prosaically aguardiente
22
(literally, “fire water”) , but it struggles to attract the middle classes. The Brazilian Institute
of Cachaça (IBRAC)is hard at work to promote quality cachaça: after all, aren’t all things
Brazilian in fashion right now? In a key example, IBRAC and a handful of quality cachaça
producers are fighting to have the U.S. agree to import cachaça under its own appellation
and no longer under the generic term “Brazilian rum”.
Farther west, on the Pacific coast, the Peruvian government has decreed pisco its
“National Drink” and an essential part of the “cultural heritage of Peru”. While production
and consumption only concern Chile, it is Peru that is requesting the appellation, since
the city of Pisco is located in Peru. This has led to a diplomatic tempest between the
two countries, with each claiming pisco for its national drink.
In 2005, the country filed an application with the World Intellectual Property Organization
to have the appellation recognised. Like cognac, Peruvian Pisco is one of the few
40% ABV spirits in the world distilled from grape juice (and not grape must). Every first
weekend of February the country celebrates Pisco, with public tastings in all cities. In
Lima’s main square, a giant fountain of Pisco Sour freely distributes the cocktail made
with lemon juice, cane sugar syrup, egg white and Angostura bitters.
23
Pernod Ricard
in Latin America
24
Mexico
Ensenda
Hermisillo
Arandas
Los Altos
Los Reyes
Mexico City
headquarters
production regions
manufacturing sites
Brazil
Argentina
Suape
Resende
São Paulo
Cafayate
San Juan
Buenos Aires
Mendoza
25
FEATURE
Latin America
Fertile Ground for Spirits
and consumed outside of normal channels, according to estimates. That's four
times the volume of wine consumption.
The same spirits-to-wine ratio is found
in Mexico, Latin America’s other major
market. Here one can see the influence of
climate, which is less conducive to drinking wine than a cold beer or a rum, whisky
or brandy mixed with cola or fruit juice.
The local cuisine, which can be very spicy,
doesn’t encourage wine drinking either.
Mexico is a case in point, where chillies
(raw Cayenne peppers) accompany almost
every dish.
Argentina remains a land of wine, and by
itself accounts for 50% of all consumption of this category in Latin America.
Its Spanish influence has been bolstered
by that of Italian and French immigrants.
When the phylloxera crisis devastated
French vineyards in the late 19th century,
Argentina welcomed a record number
of French immigrants: in 1889, over
70% of the French who boarded ships
in Bordeaux were headed for Argentina.
This helped make Mendoza the country’s
leading wine region. ■
Population
566 million (2009 estimate)
Population growth
+1.1%
Area
912,050 km2 (352,144 sq mi)
GDP
US$3,928.3 billion (2009)
US$4,433.8 billion (2010 forecast)
Per capita GDP
US$6,941(2009)
US$7,738.5 (2010 forecast)
Private sector consumption
-1.9% (2009)
+3.2% (20
10 forecast)
Growth rate
-3.8% (2009)
+1.8% (2010 forecast
)
Source: World Bank
In the trendy bars and clubs of Sao Paulo
and Rio de Janeiro, the 18-25 set is
increasingly trading the famous
Caipirinha, made with cachaça and
crushed lime, for a Caipivodka, made
with vodka. In Mexico, vodka has
become the favoured drink of the female
population. In Caracas, whisky is king. In
Chile, rum imports in 2008 set a global
record by rising nearly 70% – at the
expense of the local pisco(1).
An accompaniment for meals
•
International brands still have enormous
potential for growth in Latin America,
given the dominance of beer and locally
distilled spirits in the alcoholic beverage
market. Despite its Spanish heritage, Latin
America overall is more a land of spirits
than of wine, though that hasn’t stopped
Argentina and Chile from securing a top
spot in the market for New World wines
(along with the U.S., Australia, South
Africa and New Zealand). Of course, in
Mexico, the valleys of Guadeloupe and
26
Calafia have produced wines renowned
since the Conquistadors planted the first
vineyards on the continent, but, during
dinner time, when the French would
open a bottle of wine, Venezuelans and
Mexicans today accompany their meals
with a whisky or a brandy mixed with
water. In the evening, cocktails accompany
moments of hospitality where drinks are
shared between friends and family, both at
home and in restaurants. In Brazil, where
music is everywhere, including in the
streets and on the beaches, 70% of spirits
consumed in the country are enjoyed in the
nation’s many bars and restaurants.(2) One
might be quietly enjoying a Caipirinha
at a table in a boteco (small pub) and in
no time be swept away by music from a
nearby table.
A region dominated by spirits • Each
year, two hundred million Brazilians consume some 1,300 million litres of cachaça,
a 40% ABV spirit distilled from sugar
cane juice, one-third of which is produced
(1) Source: IWSR.
(2) Source: Pernod Ricard Brasil. Note that in Brazil
it is common for individuals to purchase alcoholic
beverages to bring to bars or restaurants for
consumption.
In Brazil,
70% of
spirits are
consumed
in bars and
restaurants.
FEATURE
latin america
Latin-American Dynamism
28
LatinAmerican
Dynamism
Enthusiastic consumers of traditional local spirits, the people of
Latin America currently aspire to more prestigious imported spirits.
Over the 1998-2008 decade, the annual growth rate for sales of
international vodka brands exceeded 7% overall, and 13% per
year for ABSOLUT alone.(1) In Mexico, the region’s second largest
market, Scotch whisky kept the pace, with annual growth averaging
11% over the decade. The economy’s return to growth this year
will boost this momentum by enabling the continued expansion
of the middle classes. According to World Bank forecasts issued
in March 2010, the average per capita GDP in Latin America will
jump to US$8,653 in 2011, a four-year rise of 31% and almost
three times the global average (11% during the same period).
With its powerful distribution network, reinforced by its lead position
in the substantial local brands segment, Pernod Ricard is wellpositioned in Latin America to spearhead the gradual shift of
consumers towards quality products. Pernod Ricard Americas
offers the most comprehensive portfolio in the region of Premium
international brands, including ABSOLUT and Wyborowa vodkas,
Chivas, Ballantine’s and Jameson whiskies, Martell cognac,
Havana Club and Malibu rums, Kahlúa and others. Not to mention
Graffigna, a high-quality Malbec wine produced by Pernod Ricard
Argentina which is an increasingly popular export.
(1) Source for this article: Pernod Ricard Market View, based on IWSR. Data at 31 December 2008.
29
FEATURE
Latin America
Mexico
Mexico
No. 8 market
worldwide
Population
109.5 million
(2009 estimate)
Population growth
+1%
Area
1,967,183 km2 (759,530 sq mi)
GDP
US$842.6 billion
Per capita GDP
US$7,691
(2009)
(2009)
/ US$873.6 billion
/ US$7,866
(2010 forecast)
(2010 forecast)
-6.9%
(2009)
/ +3.7%
(2010 forecast)
(2009)
/ +3.7%
(2010 forecast)
Growth rate
-7.1%
Source: World Bank
Mexican market structure
Total spirits >
24 million cases
million cases (No. 8 worldwide)
of which international brands > 14
including:
30
vodka
other
8% 7% 5%
brandy (excluding Cognac)
scotch whisky
12%
rum
16%
tequila
52%
In Mexico
, four years after the acquisition of Allied
Domecq, Pernod Ricard still goes by the name of Casa Pedro Domecq.
This subsidiary is a veritable institution in the Mexican market, which
ranks 8th in the world in volume for international spirits, ahead of both
Italy and Japan. The company leads this market in both volume and value,
with 3.3 million 9-liter cases sold, 40% more than its nearest competitor.
Amongst its brands, the company owns three major local brandies: Presidente, Don
Pedro and Azteca de Oro. But Casa Pedro Domecq also carries the most complete range
of Premium international brands available in Mexico, including Absolut and Wyborowa
vodkas, Chivas Regal, Ballantine’s and Jameson whiskies, Martell cognac, Havana Club
and Malibu rums, Kahlúa, and now, Sauza tequila, the category leader with more than
one million cases. In 2009, Sauza’s owner turned over its distribution to the Pernod
Ricard subsidiary in order to benefit from the now-recognised excellence of its network
and sales force.
Indeed, the takeover of Allied Domecq in 2005 resulted in a revitalised network,
a much-strengthened sales force and redefined sales and marketing strategies,
the results of which are now visible. Sales, marketing and merchandising
teams now account for 80% of the non-production workforce, compared with
55% previously. These teams total 300 people, not including 250 others who
are regularly employed through outside contractors for merchandising activitie
“In 2006 and 2007 we worked hard to stabilise the sales of our local brandies – and even to revive
them, as with Azteca de Oro – despite the natural erosion of sales in the category,”, says François
Bouyra, Chairman and CEO of Casa Pedro Domecq. "Although these inherited brands are
less promising than our international brands, they are local products that still generate respectable
margins and provide critical organisational mass. In fact, they allow us to fund our logistics
organisation and build up our sales force, giving us an unrivalled platform from which to promote
our portfolio of global brands.”
Tequila
The name “tequila” is said to be handed down from
the Conquistadors who discovered agave growing on
a small mountain whose shape resembled a woman’s
bust and was called “Tetilla” (Spanish for “teat”).
The arrival of the Spaniards in the 16th century
also brought with it the distillation process and the
production of agave wine, or mescal. Contrary to
popular belief, tequila cannot be produced anywhere
in Mexico. True tequila must be produced almost
exclusively in the state of Jalisco, from the sap of the
heart of the Blue Agave (Agave Azul), a cactus-like
plant that grows only in about a 100 sq. km area of
this region. The agave fields there now stretch as far
as the eye can see. After a 12-year growing period,
the Agave is stripped of its leaves, like an artichoke,
leaving only the heart for the distillery. The heart
is cut into pieces and steamed for several days to
convert the starch into sugar. A successive process
of extraction, fermentation and distillation ultimately
results in tequila.
There are two main types of tequilas: 100% agave
tequila and blended tequila (minimum 51% Agave Azul),
as well as four main categories, depending on age:
• Tequila Blanco or claro (“white”): the most common,
no-frills tequila, used in cocktails.
• Tequila Joven or Oro (“young” or “gold” - especial):
tequila that has undergone a double distillation
process followed by a short period of aging in oak
casks.
• Tequila Reposado (“rested”): aged in oak casks for
two to twelve months.
• Tequila Añejo (“aged”): aged from one to four and
even ten years in white oak casks.
31
FEATURE
Latin America
Mexico
Priority to top-of-the-line • Promotional development funds are now directed mainly
to Premium international products, particularly in the whisky and vodka categories
which will increasingly drive Pernod Ricard’s growth in Mexico. As a result, Chivas
Regal, which has been well-established for several decades, is now growing at an annual
rate of 17%-20%. The marketing strategy aims to position the brand on a younger
segment, taking care to preserve its top-of-the-line image in the Super Premium
(€25 for 12-Year-Old) and Ultra Premium (€53 for 18-Year-Old) segments. Ballantine’s
and Jameson cover the Premium segment (at around €12 to €15). In the cognac
category, Martell has been in Mexico for over half a century and dominates with 66%
of the market. Lastly, in the vodka category, the subsidiary now boasts a champion
brand in Absolut. “The brand has an excellent reputation here,” , says Francois Bouyra.
"It totally dominates the Premium segment, which for several years has grown at a double-digit
pace which is twice that of the entire category. The investment that we’ve made in Absolut
since adding it to our portfolio will increase this momentum.”.
In recent years, international brands have grown at the expense of local brands. This
growth was hampered by the crisis in 2008-2009 and the H1N1 epidemic which severely
impacted Mexico, causing GDP to plunge 7% and the spirits market to tumble 9%
to 10% in 2009. However, the medium-term trend remains favourable to big-name
international brands and a recovery is expected in 2010. The last economic crisis saw
the market for international brands fall from 13.9 million cases in 1998 to 10.4 million
in 2003, before climbing back up to 14 million by 2008. The local brands have had
to cope with a dual phenomenon: several large tax and duty increases on alcohol
(a combined 50% increase over several years) and, for the past 10 to 15 years, growing
competition from unlabelled products distilled and sold on the underground market
for between $2.50 and $5.00 a bottle.
Whisky or vodka?
Younger generations love to be different from their
parents. Fifty years ago, Mexicans drank brandy; their
children preferred rum, which had its heyday in the
1970s/1980s. New generation, new cycle: 1990 - 2005
were the “tequila years”, with Mexico’s newly liberated women in particular enjoying this colourless spirit
which was more discreet than its brown counterparts.
Today tequila is on the decline in Mexico, with whisky
(up 18% per year over three years for western-style
whiskies) and vodka (up 5%-6% per year, and 14% for
the Premium segment) now competing for the top spot.
32
It’s a prize that can pay big rewards: the successive
surges in brandy, rum and tequila sales show that it
can rapidly amount to 10 million cases per year. With
their international brands and “sophisticated” images,
whisky and vodka are two categories that appeal to today’s young adults. Nearly 70% of vodka consumers are
between 18 and 35 years of age. The addition of Absolut
to Pernod Ricard’s portfolio and its powerful distribution
network in Mexico has strengthened the hand of those
who are betting on vodka’s success.
Highly motivated sales forces • Today the subsidiary’s sales teams cover the entire
country, enhancing relations with key account customers every day with their extra care
and attention. Casa Pedro Domecq has become a benchmark for business practices: its
training programmes host the employees of distributors, wholesalers and key players
in the on-trade channel. Several awards have acknowledged its expertise, including the
highly prized “Best Supplier of the Year” award from the Mexican national wholesalers’
association (ANDIVIL).
Though the sales forces in the field are still largely male-dominated, the marketing
teams at the Casa Pedro Domecq headquarters are predominantly female. "This reflects
a conscious decision that we made a few years ago that has really paid off. It is aligned with
trends amongst the younger generations which show that, following the liberation movement
of the 1990s, Mexican females aged 18-25 are consuming alcohol on a par with their male
counterparts.”
In the crowded tequila market, Casa Pedro Domecq is executing a two-pronged strategy,
independently of its distribution agreement with Sauza, the category leader. Currently,
the Group’s international brand, Olmeca, with its Olmeca Tezon, ranks 4th by value
amongst international tequila brands. It is number one in the Europe/Middle East/
Africa region. The launch of Olmeca Altos in late 2009 strengthened the brand in
the 100% Agave Super Premium segment. Produced in the heart of the Los Altos
Mountains in Mexico’s western state of Jalisco, this line extension is aimed primarily
at the bartender-connoisseur market. Olmeca is now reserved for export, whilst two
other tequila brands have been specifically created for the Mexican market: Agavia, an
innovative and contemporary Premium product, and Real Hacienda, a more traditional
tequila that is also 100% agave, but offered at a more accessible price to reach a broader
customer base. ■
Lunch and Dinner
Mexico is a warm-weather country and its cuisine is
relatively spicy, two factors that do little to favour wine. The
country consumes 100 times more beer than wine, despite
several vineyards handed down from the Spaniards,
including Chateau Domecq, a 2008 silver medal winner
at the International Wine Competition in Brussels. For those
who want a more sophisticated drink, a business lunch
Thirty million
Mexicans reside in
the United States.
Sometimes prone to
nostalgia for their
home country, they
are all potential
consumers of Casa
Pedro Domecq
products such as
Presidente, the
leading brand of
imported brandy,
Don Pedro and
Azteca de Oro.
Pernod Ricard’s
U.S. and Mexican
teams are working
closely together to
develop initiatives
aimed at this
population.
or Sunday dinner will more readily be accompanied by
a whisky or brandy mixed with water or soda, or even a
tequila with grapefruit juice. In the evening, after dinner,
Mexicans like to go out or have a drink with friends.
Off-trade sales thus represent 65% of the market, versus
35% for on-trade.
Two
Tequila-Loving
Territories
Together, Mexico (8 million cases) and the U.S.
(11.4 million cases), which has a large population of
ethnic Mexicans, consume 85% of the 22.6 million cases
of tequila produced annually (6.3% annual growth between
2003 and 2008). Germany lags far behind with 400,000
cases. Outside North America, tequila is still largely
consumed in the form of Margarita cocktails. Over three-
quarters of tequila sales still involve entry and mid-range
products, as Premiumisation has yet really to take hold
in this category. It nevertheless has many of the assets
needed for an upmarket shift: a regulated raw material
and manufacturing method, a limited geographical area,
and a long historical tradition.
33
FEATURE
Latin America
Brazil
Brazil
Inside the latin
american tiger
Population
196.1 million
(2009 estimate)
Population growth
+1.26%
Area
8,511,965 km2 (3,857,597 sq mi)
GDP
US$1,567 billion
Per capita GDP
US$7,991
(2009)
(2009)
/ US$1,804 billion
/ US$9,102
(2010 forecast)
(2010 forecast)
+1.9%
(2009)
Growth rate
+0.1%
(2009)
/ +4%
/ +5%
(2010 forecast)
(2010 forecast)
Source: World Bank
Brazilian market structure
Total spirits > 117
million cases
34
6%
bitters
rum
liqueur
tequila
gin
13%
vodka
28%
scotch whisky
47%
3%
2%
1%
of which international brands > 5.7
including:
In Brazil
, the crisis is already a memory. By summer
2009, confidence was back in the business world. By November, employment had recovered to pre-crisis levels and consumer confidence
indicators were once again on the upswing. While taxes on alcohol
remain significant, the Real, which had fallen to 2.40 per U.S. dollar
by end 2008, stood at 1.75 per US dollar a year later, making imported
products once again more affordable. The land of the samba and Carnival once again
offers many great reasons to party and celebrate with friends and family, and to enjoy
a glass of ABSOLUT or Chivas Regal.
“When the crisis began, the entire population took a hit psychologically,” explains Bryan
Fry, CEO of Pernod Ricard Brasil. “But the country quickly bounced back. On a year on
year basis, the spirits market was down in 2009 compared to 2008, but in December 2009
and January 2010, depletions of vodka and Scotch whisky again showed growth in the double
digits. At Pernod Ricard Brasil, business is strong; our local brands have held up well, and the
team have continued to work diligently on building a foundation for our strategic imported
brands.” It’s the strength of Pernod Ricard´s local brands that has made the company
a leader in terms of volume (23% market share, excluding cachaça). These brands—
including some acquired in the 2001 buyout of Seagram—still account for 80% of its
operating profit.
“We have a balanced portfolio of high quality local brands that meet the aspirations and needs
of various social class levels that seek out branded products,” Bryan emphasises. “Despite
significant progress, there are economic disparities in the purchasing power of consumers
throughout the country. In Brazil, a bottle of Orloff vodka at 18 reais (about €7.50), Natu
Nobilis whisky at 28 reais (€11), Passport whisky at 32 reais (€13), or even Montilla rum
at 12 reais (€5), represents, for a portion of the population, a quality product to which they
aspire to.”
Despite slow erosion in sales volume of 1% to 2% per year, particularly in the lowprice segments, cachaça still represents nearly 80% of the total Brazilian spirits market.
With its São Francisco and Janeiro brands, Pernod Ricard Brasil is capturing the trend
towards premiumisation in this category.
Even brilliantly packaged, however, these local brands do not deliver the level of
prestige a Chivas Regal, a Ballantine's or an ABSOLUT does—imported and sold at
between 60 and 100 reais (€24 to €42)—in the Premium and Super Premium segments. Pernod Ricard Brasil's strategy is to build on the strong commercial footprint
it already has in the country, and optimise it in order to capture premiumisation of
consumption amongst consumers whose standard of living is on the rise. Already,
the middle class (monthly household income of 500 to 1,000 US dollars) represents
50% of the population, adding to the 20% of upper middle class and upper class
households.
“Our Premiumisation strategy therefore applies to all brands,” Bryan explains. “The addition of ABSOLUT to the portfolio has presented us with a fantastic opportunity, and we have
adjusted the selling price and implemented a new commercial strategy to ensure the brand
benefits from increased marketing investment: Marketing a brand in the right place to the
right consumer is critical."
Premiumisation also concerns distribution. The arrival of ABSOLUT accelerated
the need to pursue the formation of a network of exclusive distributors for Premium
brands. “We will have over a hundred salespeople next year dedicated to these distributors,
wholesalers, on trade customers and key accounts,” adds Bryan.
400,000
Venues for
Celebration
In Brazil, ties of family and friendship are very
strong. This is evident in the festive moments
shared in some 400,000 botecos, bars, restaurants
and cafés throughout the country. Around
18,000 outlets are the core target of Pernod Ricard
Brasil, as this represents the core premium spirit
consumption outlets. As this figure might indicate,
Brazilians consume around 60% of spirits outside
the home. This is a major advantage for Pernod
Ricard, where conviviality and celebration are
encoded in the corporate DNA. Naturally, Montilla
Rum is a partner of the Recife Carnival.
Cachaça
or Absolut?
Vodka is the fashionable spirit in trendy bars and
nightclubs in major Brazilian cities. It is the fastest
growing spirits category (up 8.2% annually in 19982008), and the caipiroska (fruit based cocktail
made with vodka) is increasingly replacing the
caipirinha (same cocktail but made with cachaça),
so beloved by Brazilians. Pernod Ricard is now
in an excellent position to exploit this trend. Its
Brazilian subsidiary already had Orloff, one of
the market’s fastest growing local vodkas with
over 750,000 cases sold each year. An ABSOLUT
caipiroska is an even more premium version
requested in bars by name, and it is the top card in
the company´s vodka portfolio, and already leads
the premium imported vodka category, posting
40% growth in 2009 compared to 2008. Since it
joined the Group, ABSOLUT has become a priority
brand for Pernod Ricard Brasil, as evidenced by
the buzz surrounding the VIP party held in May
2009 at Sao Paulo’s Pinacoteca museum to launch
the campaign “In an Absolut World”.
Distribution
an Asset, and
a Challenge
In Brazil, as in many of the Group’s other markets,
distribution is a key factor for success. However, in
a country covering 8.5 million square kilometres,
it is sometimes easier said than done: it takes, for
example, 10 to 16 days to ship a case of ABSOLUT
by road from the Atlantic coast to Manaus in the
centre of the Amazon. To address this issue, Pernod
Ricard Brasil has a diversified processing base,
with one plant located in the southeast, in Resende,
between Rio de Janeiro and Sao Paulo, and another
in the northeast, in Suape, 40 km south of Recife
(see map p.24-25). Both have the capacity to mix
and bottle the entire locally-produced portfolio
(Montilla, Natu Nobilis, Orloff, Passport, Teachers,
São Francisco).
35
FEATURE
Latin America
Argentina
Argentina
Land
of wine
Population
40.2 million
(2009 estimate)
Population growth
+0.9%
Area
2,700,000 km2 (1,068,296 sq mi)
GDP
US$250.1 billlion
Per capita GDP
US$6,217.3
(2009)
(2009)
/ US$259.7 billion
/ 6,398.7
(2010 forecast)
(2010 forecast)
-1.6%
(2009)
Growth rate
+0.1%
(2009)
/ +1.8%
/ +5%
(2010 forecast)
(2010 forecast)
Source: World Bank
Argentine market structure
Total wine > 125 million cases
Total spirits > 5.8 million cases
36
5%
scotch whisky
vodka
rum
tequila
gin
other
10% 9%
bitters
70%
3%
1%
1%
1%
liqueur
of which international brands > 2.6
including:
argentina
Surpassing even Chile,
eis the great
wine country of South America: it is the world’s fifth-largest producer
(13.9 million hectolitres in 2009 as estimated by the International
Organisation of Vine and Wine), its seventh-largest exporter, and ranks
seventh in consumption, just behind Spain. More wine is enjoyed there
than in all the rest of the continent’s countries combined. According to
Sergio Marly, Managing Director of Pernod Ricard South Cone and Andes, “Today, as
in other traditional wine-growing countries, consumption is declining in terms of volume (in
favour of less-expensive beer), but not in value: the demand for quality wine is increasing.” Reds
and sparkling whites are gaining ground at the expense of rosés and still whites. Pernod
Ricard Argentina, with its local brands Colon, Graffigna and Mumm Espumante, is a
major player in this market. To remain at the forefront, the company invests in quality
and innovation. “We are developing and planting new varieties in order to offer innovative
products that are suitable for late harvest and can be used to produce wines with a higher sugar
content such as Malbec Tardio and Etchart Torrontés Tardio,” Sergio adds.
But today’s top priority is the development of exports. At present, these account for
just 20% of volumes produced and 40% in terms of value. In acquiring Allied Domecq
in 2005, Pernod Ricard, which already owned Etchart (a highly sought-after label,
particularly in Canada), found another great name in the portfolio: Graffigna. The
Group is now working to develop Graffigna, which has the potential to become a true
international brand.
The U.S., where Graffigna has been imported since 2007, is already the wine’s number
one market. Buoyed by its excellent value (around $10 per bottle, and $20 for Grand
Reserve), Graffigna has big plans for the future. To achieve them, the brand can leverage
the Group’s global distribution network to expand its reach in North America, Mexico,
the U.K. and Scandinavia, and to capture new markets.
Ubiquitous fernet • The dominance of wine, the preference for takeaways, a still-
sparse middle class (just two million households) and recurring economic difficulties
have so far hindered the spirits market, which totals about 5.8 million cases per year.
What’s more, this market is influenced by a uniquely Argentine feature: fernet-type
bitter spirits (liqueurs distilled from bitter plants such as gentian) have in 30 years
captured more than 45% of the market with 2.6 million cases – and they’re still
growing. In terms of market share, they rank far ahead of whiskies (23%) and liqueurs
(18%), another popular category. “Fernet is a fashionable drink. Fernet and cola is the
preferred cocktail of young adults, who drink it regardless of the setting - whether at a café,
a restaurant or a nightclub,” Sergio elaborates. Also specific to Argentina, the market
for imported spirits—other than fernet—is weak, with fewer than one million cases
sold per year. The bulk of Pernod Ricard Argentina’s sales on this segment consists of
Absolut vodka, Havana Club rum and 100 Pipers, Ballantine's and Chivas Regal scotch
whiskies. The market for locally produced spirits, however, exceeds three million cases.
In fact, nearly 75% of the whisky sold in Argentina is produced in-country. Pernod
Ricard Argentina leads in this market of local products with four out of seven of the
best-selling brands, including its Fernet Capri, Blenders Pride whisky, Cusenier liqueurs
and Doble V Whisky, which together account for 750,000 cases.
Objective:
Quality
How can the company ensure that a Graffigna
Grand Reserve sent to the other side of the
globe doesn’t deteriorate during the long
weeks of travel? In 2009, Pernod Ricard
Argentina broke new ground by making use
of modern traceability technologies. Sensors
placed in each shipment recorded changes in
the ambient temperature on an hourly basis
throughout the chain of transport for cases
sent to Group subsidiaries in six test countries:
the U.S., Finland, the U.K., the Netherlands,
Brazil and Venezuela. Once analyses of any
organoleptic inconsistencies are completed
in 2010, new recommendations will be issued
for future shipments.
Malbec:
The Pride of
Argentina
Imported from France in the nineteenth century,
Malbec has become the flagship varietal for
the wines of Argentina, representing 95% of
its exports. Indeed, the country is home to
10,000 of the 18,000 hectares of Malbec
vineyards planted worldwide, ahead of
France (under 6,000 hectares), where it is
today primarily associated with wines of
Cahors. Malbec is an early-harvest grape that
produces richly coloured, tannic wines suitable
for aging. It is an ideal accompaniment to red
meat, another great Argentine speciality.
Graffigna:
A Rich
Heritage
Founded in 1870 by an Italian immigrant, Don
Santiago Graffigna, Bodega Santiago Graffigna
is one of the oldest wineries in the country.
Located at the foot of the Andes in the province
of San Juan, it is surrounded by vineyards
blessed by an exceptional climate, allowing
it to produce expressive and intense wines. In
June 2008, the New York Times selected the
2004 Graffigna Grand Reserve 100% Malbec
as one of the 10 best Argentine wines to
accompany meals.
37
FEATURE
Latin America
Corporate Social Responsibility
38
Companies at
the forefront:
a proactive
approach
Promoting responsible drinking, efficiently managing energy and raw
materials, training staff: these are all areas in which Pernod Ricard’s
subsidiaries in Latin America are developing proactive strategies for
responsible development that respect their host populations.
Jaime Camil is one of Mexico’s most famous actors. He is now also the
ambassador of the Group’s foundation in Mexico and spokesman for its
commercials and ad campaigns against drink-driving. Along with the fight
against misusing alcohol and the sale of alcohol to minors, combating
drink-driving is one of three major campaigns conducted and financed
by the Group's subsidiaries in Latin America, whether directly or through
professional associations involved in this area.
Brazil has vast natural wealth: all the more reason not to waste it.
New methods of production, reducing the weight of bottles, ambitious
programmes for water and energy savings: Pernod-Ricard’s teams, through
their knowledge and know-how, innovate and lead the way in this vast
country covering half of the continent, mirroring similar efforts in Mexico
and Argentina. Without the enthusiasm and professionalism of its trained
staff, Pernod Ricard Americas would not be experiencing the growth it
currently enjoys. The Boards of Directors are already largely made up of
local leaders, but the Group wants to go further, and is pursuing an active
policy to identify, train and promote all who have talent.
39
FEATURE
Latin America
CSR/Social
Social
South America:
a culture
of sharing
Interview
Cédric Ramat
Human Resources Director, Pernod Ricard Americas
at the time, but the integration happened
very quickly and without obstacles. Former
employees of Seagram in Brazil or Allied
Domecq in Mexico are now Pernod Ricard
members, and proud of it.
How is Pernod Ricard’s culture
received in Latin America?
Cédric Ramat > There are many
commonalities between the Pernod
Ricard culture and the Latin American
lifestyle: a desire to share, the importance
of friendship, family and the Group, a taste
for celebration – in the best sense of the
term. In each subsidiary, “happy hours”
are opportunities to try our products
and, more importantly, they provide an
occasion for our people to share and learn
more about each other outside of the daily
work environment (for example, the “hora
do pastis” [Pastis hour] in Brazil). The
companies acquired during the Seagram
and Allied Domecq buyouts were much
larger than our Pernod Ricard subsidiaries
40
re you able to find the talent
A
you need for the Group’s advancement?
C.R. > The answer is a definite yes. There
is a genuine entrepreneurial spirit here.
These are all countries still in the making.
Nothing is ever impossible; people are
always ready to change things, to meet new
challenges, to invent new solutions. Pernod
Ricard Americas has 2,200 employees
in the region, of which 98% are native
born. Management committees are also
predominantly local, with one-third being
expatriates – mostly from France, along
with some from Spain and Australia.
oes mobility exist within the
D
region?
C.R. > Mobility is not a natural
phenomenon, as it is in many countries,
unless it involves going to the United States.
People still feel divided between a sort of
distrust of that country and an attraction
to the American dream. For us, however,
mobility is a priority. We strongly believe
in diversity and in cultivating a wealth of
talent and experience. We thus expend a
lot of energy to encourage and facilitate
the mobility of our teams within the Group
worldwide. We saw our first successes in
this area in 2009 with more than a dozen
international transfers in Latin America
and we intend to strengthen these efforts.
Among the many examples I could cite, the
Sales and Marketing Director of Pernod
Ricard Andes is Venezuelan, the Finance
and Administration Director is Brazilian,
the Sales Director of Venezuela is from
Argentina, and the Managing Director of
Colombia is also from Venezuela! This
policy of mobility—which encourages
open-mindedness, creativity and knowledge
of other ways of working—is validated
by the necessity of gaining international
experience in order to manage a subsidiary
or a finance or marketing division.
What is your priority for Human
Resources management?
C.R. > Management [in the region] is
influenced by a culture more conducive
to oral communication than written
procedures. This has many advantages:
for example, because there is ample
dialogue, managers personally know their
teams very well; but it also has limitations.
We are working to formalise processes at
a basic level, which brings transparency
and therefore fairness to decision-making,
whilst preserving all the benefits of the
current managerial culture. We have
launched ambitious programmes in the
subsidiaries to develop systems that allow
us better to define the skills needed for
all important functions in the region
and better to identify and develop future
talent.
Mexico The pétanque court? It’s on the 4
th
floor...
When two co-workers at Casa Pedro Domecq want to relax after a long day’s
work or take a break from a problem requiring further reflection, they do not
need to go very far: an authentic pétanque court has been installed in the
midst of the offices on the fourth and top floor of the building which houses
the Group’s Mexican subsidiary.
“Camaraderie is a major feature of the company’s culture,” says Liliana Leon,
Human Resources Director for Casa Pedro Domecq.“Along with our brand portfolio, it is one of the strengths that attract
candidates to work here. Word of mouth is the best advertising and we have no difficulty recruiting talented individuals. We
are looking for imaginative employees, who are able to innovate and are self-directed.”
Brazil “Adopting” a point of sale
Business intelligence is now the business of all employees of Pernod Ricard Brasil. The programme
Adote um PDV (“Adopt a Point of Sale”) encourages all employees to visit a bar, nightclub, store or
wholesaler every two weeks and interact with customers and staff. Whether they impart advice or
collect information, they can then report their experiences directly via a dedicated intranet portal.
Nearly one-third of the company’s 360 employees are already taking part in the programme. The
best contributors will be invited to join the sales force on an upcoming business trip to Scotland.
Argentina Pmanagement
rofessional human resources
In 2009, Pernod Ricard Argentina adopted an “integrated talent management programme” with an innovative, twofold
objective: 1) to ensure that for each key position the company has the necessary managerial talent on hand; 2) to anticipate
eventual changes. This programme involves several steps:
1) Identification of all “critical” positions in the subsidiary – i.e., especially those that impact value creation or that could
endanger a key element of the company’s performance if left vacant or occupied by an insufficiently skilled manager.
2) Identification of all “key players” selected for their performance, managerial know-how, ability to motivate and lead
teams, and their potential to grow into positions of high responsibility. This process involves regular assessments and
interviews performed internally, as well as by outside consultants.
3) Establishment of development plans for individual skills: new objectives, training, coaching.
4) Succession planning: For each “critical position” identification of potential successors who can take over if necessary
(departure or transfer).
This programme will be expanded in 2010 to Uruguay and the Andean countries (Bolivia, Chile, Ecuador and Peru).
Brazil Persons of influence
The best projects also require good communication, because even a flawless programme has the potential to be misunderstood. In the first quarter of 2010, the Board of Directors of Pernod Ricard Brasil created a new tool to smooth the flow of
information: ACT, which stands for “Advisory Committee Team”. The 13 members of this advisory committee, representing a
cross-section of the company’s operations, will henceforth have advance access to information about certain Management
Committee projects. The Management Committee will thus be able to take their initial reactions into account and make
necessary adjustments. Also selected for their powers of persuasion, the members of the ACT team will be a great asset in
promoting these projects. “They have their own channels of communication, and are natural leaders,” says Viviane Aguiar,
Human Resources Director for Pernod Ricard Brasil.
Mexico Educating customers
As the number one spirits company in Mexico, Casa Pedro Domecq has developed genuine expertise in sales and merchandising training. It now shares this know-how through a training programme aimed at employees of a score of
major customers, including distributors, wholesalers and large retailers. Courses cover three fields: products, sales
negotiation and communications.
41
FEATURE
Latin America
CSR/Societal
Societal
Responsibility:
a wealth
of initiatives
Pernod Ricard’s Latin American subsidiaries are engaged on
the ground in programmes to promote responsible drinking
which are tailored to local conditions and realities. Whether
for communications campaigns, outside conferences, inhouse seminars, or displaying logos and icons on labels,
the expertise of our marketing and communications teams is
very often solicited for the five strategic directions adopted by
the Group: promote moderate consumption, combat drinkdriving, spread the message of alcohol’s potential risks to young
people, discourage alcohol use by pregnant women, and set
an example. The leaders of many Group subsidiaries have been
and remain at the forefront of their industry’s efforts in the area
of social responsibility.
In Mexico, the Domecq Foundation has since early 2006
concentrated its efforts on promoting responsible drinking,
with three priorities: fighting drink-driving, the leading cause of
death among 18-25 year olds, protecting minors and promoting
moderate consumption.
Alongside their own initiatives, subsidiaries in all countries
continue actively to support prevention associations founded
with the help of other stakeholders in the wine and spirits
industry.
42
Brazil
Promoting
Information programmes / From August to November 2009, Pernod Ricard Brasil held a series of
informative talks in schools in the cities of Resende and Suape – where the Group operates industrial
sites – with the help of assistants of Dr Arthur Guerra, psychiatrist and expert on alcohol and behaviour
and president of the Brazilian NGO Centre for Information on Health and Alcohol (CISA). These conferences
were addressed to parents, teachers and students. Special sessions were dedicated to employees of
the Group’s sites in these cities and at the headquarters in Sao Paulo.
Mexico
Fight against
“You Drink Or You Drive” (“O tomas o manejas”) / Jaime Camil, an actor and singer idolised by Mexican youth,
is now also the Domecq Foundation’s ambassador in its fight against drink-driving. From the Foundation’s
homepage (www.fundaciondomecq.org), to the new advertising campaign “O tomas o manejas” (“You Drink
Or You Drive”), the actor voted “Sexiest Man of the Year” in 2007 by the Spanish version of People magazine
(six million readers) is contributing his popularity to promote responsible drinking. This widely circulated
campaign (TV, radio, cinema, bus shelters, and billboards) also reaches schools and universities through
testimonials and the distribution of videos and leaflets.
Thus the Foundation created by Pernod Ricard’s Mexican subsidiary is once again catching public attention,
after an initial campaign from October 2006 to December 2007 which was broadcast more than 800 times
on five television stations. In the current campaign, two commercials use analogy and humour to dramatise
situations where irresponsibility causes risk to oneself as well as to others. In one, a man is seen making grilled
sandwiches while taking a bath; in another, he stops in the middle of a busy street to tie his shoelace.
Brazil
Fight against
drink-driving
Safe transport for promotional events / In May 2009, taxis escorted all of Pernod Ricard Brasil’s guests
at the launch party for the “In An Absolut World” campaign at the Pinacoteca Museum in Sao Paulo. On
2 August in Rio de Janeiro, the second annual “Ballantine’s Impression Party” featured 25 minibuses
providing shuttle services throughout the night to ensure the safe transport of VIPs, actors and other
guests.
Mexico
Chile
Protecting minors
“Selling alcohol to minors is a serious offence”: so recalls the Domecq Foundation’s “Zero Tolerance”
campaign in Mexico. Launched in partnership with the foundation “Conviviencia Sin Violencia” (living
together violence-free), the campaign aims to educate children’s parents and entourage against giving
them access to alcoholic products. Aided by its famous ambassador, actor Jaime Camil, the Foundation
communicates regularly with youth on the dangers of alcohol.
Brazil
Discouraging
Since 2009, the “pregnant woman logo” has been displayed on all bottles distributed by Pernod Ricard
Brasil. This initiative, launched in the Group’s European subsidiaries, was voluntarily adopted by the
Brazilian company in May 2009, starting with Orloff vodka, and followed by all brands as the new labels
bearing the icon became available.
Venezuela
Colombia
Setting an example
“Comprometidos con el equilibrio” (Ensuring Moderation) / Responsible drinking was the focus of a
special seminar for all employees of Pernod Ricard Venezuela and Pernod Ricard Colombia held in
September 2009 in Caracas. Participants in “Comprometidos con el equilibrio” were given the opportunity
to test their knowledge of Pernod Ricard’s Responsible Drinking Code, voting electronically to express
their views on the compliance (or lack thereof) of a variety of advertising projects.
Chile
Mexico
Team support for non-profits / Pernod Ricard also contributes to promoting responsible drinking through
active participation in professional non-profit associations.
• In 2008, Laurent Pillet, Managing Director of Pernod Ricard Chile, and four colleagues co-founded APROCOR,
a non-governmental organisation that brings together leading spirits producers and distributors who are
committed to promoting responsible drinking. This association, of which Laurent Pillet is also the first
President, now represents 97% of the industry’s sales. In less than 18 months, APROCOR has sponsored
nearly a thousand initiatives, in particular targeting nightclubs located near campuses and beaches, as well
as sensitive dates such as National Day in September and universities’ back-to-school week in March. When
a group of young adults arrives at a nightclub, any member who agrees to stay sober throughout the evening
is given certain benefits such as unlimited soft drinks and a gift voucher worth 10,000 pesos (U.S. $20) upon
his or her departure... if all goes well, of course. According to Laurent Pillet "In record time, APROCOR has
gained very high credibility with the public and the authorities. Enshrined in our charter is a prohibition on
linking our company’s brands to consumer-oriented programmes. This disinterested stance vis-à-vis our
work has made it possible for the media to cover it extensively, especially on television.”
• C asa Pedro Domecq is also closely associated with FISAC (Social Research Foundation), which is chaired
by Casa Pedro Domecq’s CEO, François Bouyra, and now represents 80% of the Mexican spirits industry. It
is also involved with distributors, the national retailers’ association and the powerful restaurant association
(13,000 restaurants), as well as communications companies and media groups. These combined efforts
increase the impact of initiatives, campaigns and actions carried out in partnership with governmental
bodies and supported by the wife of President Felipe Calderon, Margarita Zavala Gomez del Campo, who is
also very committed to this cause.
moderate
consumption
drink-driving
alcohol use
by pregnant women
43
FEATURE
Latin America
CSR/Environment
Environment
Saving water,
energy and
raw materials
Cassio Cunha
Director of Quality, Safety and Environment, Pernod Ricard Americas
“Pernod Ricard has adopted an integrated approach to its QSE efforts
in Latin America, simultaneously setting up programmes and processes
to improve the performance of its industrial operations, better ensure
the safety of its employees, and reduce its impact on the environment.
This has meant implementing new production systems, partnering
with suppliers, and involving management commitment.”, So
explains Cassio Cunha, head of the region’s Quality, Safety and
Environment department. The certification process for ISO 9001 (quality management),
ISO 14001 (environmental management), OHSAS 18001 (health and safety of staff)
and, by 2012, for ISO 22 000 (food safety), is aimed at ensuring that Pernod Ricard’s
products are manufactured in conformity with international standards of quality,
resource conservation (water, energy and raw materials), and the protection of health
and safety of both employees and consumers.
In Latin America, the Group has set new targets for reducing consumption between
2010 and 2012:
• reduce water and energy consumption by 10%,
• recycle at least 85% of the waste it generates.
A number of programmes have already been launched to install precision consumption
measurement and control systems, particularly for water from pump or catchment
sources. This is an essential first step for undertaking projects to reduce its use. Capital
investments have been directed to replacing or reinforcing pipe systems in order to
minimise leaks. Training programmes have been launched to educate employees about
properly controlling processes and the importance of preventing the waste of precious
resources like water.
Projects to economise raw materials include one to produce lighter weight bottles in
Brazil, Mexico and Argentina. Between 2005 and 2010, some 2,100 tonnes of glass
have been saved in Argentina, thanks to the re-engineering of a dozen different wine
bottles.
44
Olmeca Plant
in
Arandas,
Mexico
New Process for Manufacturing
and Waste Recovery
It’s against the idyllic backdrop of the Los Altos de Jalisco mountains, east of Guadalajara, that Pernod Ricard
produces its premium tequila, Olmeca. But the industrial site in Arandas now has something new to boast about
– to wit, two major advances in sustainable development. Teams from Casa Pedro Domecq have developed an
ingenious waste recovery unit, as well as a production process that slashes water and energy consumption.
An Optimised Production Process • The heart of the agave plant, once harvested, must be soaked
with water and then steamed to convert its starch into sugar. The agave hearts are then crushed and their
juice collected to begin the process of fermentation and distillation. By optimising this process, Casa Pedro
Domecq was able to reduce the amount of water needed for this first step of processing, obtaining a liquid with a
28% higher sugar content. Because it’s more concentrated, producing one litre of distilled alcohol from it requires
15% less energy.
Waste Recovery • Less water injected during the manufacturing process also means less stillage, the liquid
waste from distillation. But in Arandas, they’ve taken things a step further. A composting site now receives the
agave dregs, which are mixed with the liquid stillage, or vinasse. According to official analyses, every four
months the water-tight compost area, which measures 25,000 square metres, transforms nearly 1,300 tonnes of
waste rich in carbon, nitrogen, calcium and phosphate, into a high quality, marketable fertilizer. Packaged onsite, this fertilizer has replaced 30% of the chemical fertilizers used in the nearby agave plantations. The green
spaces of the town of Arandas are also fertilized in this way when possible, to the acclaim of the municipality and
its inhabitants. Other factories in the region have already expressed interest in the process.
“ With their imagination and know-how, our teams have managed to return to
the earth what we take from it. And at the same time, we save money on chemical
fertilizers and on the stillage processing plant that we did not have to build.”
Ivan Saldana, QSE Manager for Casa Pedro Domecq
Montilla
Rum,
Brazil
Lighter Bottles
Through a new design and collaboration with its supplier,
Pernod Ricard Brasil was able to reduce the weight of its
Montilla Rum bottle by 15%—from 600 grams previously,
to 502 grams in 2009. This gain was achieved with very
little change to the overall shape of the bottle. It reconciles
both the technical requirements and market expectations
for a product of this quality. Meanwhile, the shipping cases
have been made more compact by eliminating the use of
cardboard dividers.
Benefits: 2,000 tonnes/year of less glass consumed
236 tonnes/year of cardboard saved
2,300 fewer tonnes of CO2 emitted each year
“As the most iconic alcoholic beverage of the
Northeast region and the sales champion
of our portfolio, it was very important for
Montilla rum to become the first Brand
to actually make a difference in terms
of responsibility towards environment
issues”.
Eric Sampers, Senior Brand Manager
Traditional Brands
Resende,
Brazil
Planting Trees
Etchart Winery
in Cafayate,
Argentina
Natural Treatment of Wastewater
Faced with the need to reduce the environmental impact of its business, the Etchart winery, located in the
“magical valley” of Cafayate in the far north of Argentina, has designed and built a natural wastewater treatment
plant. After passing through a first stage of sedimentation of solids and pH neutralization, wastewater is directed
to flow slowly over a gently sloping hill. This slope is divided into a multitude of cells in which grow grasses
whose roots harbour thousands of micro-organisms. These tiny bacteria gradually break down and digest the
organic matter present in the run-off water. At the bottom of the slope, the water purified by this process is
reused to irrigate the vineyards.
“We installed this system in 2009 and tested it with the first harvest.
We can now say that it is a complete success.”
Alejandro Iocco, QSE Manager, Pernod Ricard Argentina
Pernod Ricard Brasil and its employees at the Resende
plant have joined forces for a two-phase planting of
6,500 trees on four hectares of land near the Paraiba
River. Launched on 21 September 2006—Brazil’s “Arbor
Day”—in partnership with the NGOs “Educa Mata Atlântica
Foundation” and “Aguas Limpas Paraty”, this initiative has
already seen 300 trees planted per Resende employee.
In Suape, a tree-planting program was also developed,
along with an environmental outreach program involving
not just the plant’s employees, but 1,100 children in
seven nearby schools as well. Guided by the plant’s
staff, students were educated about good practices in
preserving the environment (primarily regarding water,
energy and waste).
“We aim to educate children
and teenagers about the importance
of preserving the environment. All our
efforts are aligned with our QSE policy
and contribute to make communities
and consumers more concerned with
a sustainable world.”
Melissa Madi, our QSE
and Development Manager
45
”I’m Here” –
An Absolut
Collaboration
opens globally
On Friday March 19, 2010
at 12 GMT, Spike Jonze’s
highly anticipated film,
I’m Here, was globally
released on
www.imheremovie.com.
This 30-minute robot
love story premiered
at the 2010 Sundance
Film Festival, and
thereafter screened
at the Berlinale. Now
it is made available
to viewers all around
the world, through
a striking online cinema
experience. I’m Here is
a creative collaboration
with ABSOLUT VODKA,
acknowledging the
brand’s position as
a pioneering and
culture-shaping brand.
46
Martell opens
its first boutique
in Hong Kong
International
Airport
Maison Martell, a global
leader in the XO category,
is burnishing its image
as a contemporary luxury
cognac with the opening
of its first dedicated
boutique in Hong Kong
International Airport.
The occasion also
marked the introduction
of the brand’s new
visual style.
In this space in one
of the world’s largest
air transport crossroads
in the world, travellers
are beckoned to take
part in a unique sensory
experience in the Martell
universe, to discover
its unique heritage
and prestige credentials,
its eaux-de vie and,
of course, its cognacs.
The Maison’s new visual
style, unveiled for the
occasion, pays homage
to the brand’s culture,
heritage and unrivalled
know-how.
Havana Club
International
S.A. awarded
at Havana’s
International Fair
Havana’s 27th
International Fair that was
held in early November
2009, from 2nd to 7th is
an important commercial
event in the Latin
American and Caribbean
zone.
It was attended by
representatives from
an impressive 54 nations.
During the event, Havana
Club International S.A.
exhibited the entire
portfolio, from white rums
like Havana Club 3 year
old to aged rums like
Havana Club Especial
and Havana Club 7
year old and of course
Maximo Extra Añejo.
The brand has also
unveiled its new 7 year
old bottle, which clearly
positioned this rum in
the “super premium”
spirits category.
Havana Club
International S.A.
has been distinguished
by 2 rewards:
- Quality reward with gold
medal for Havana Club
Añejo Especial rum,
- Trophy of the best
stand.
Chivas Regal
continues its
collaboration
with the Alfred
Dunhill BAFTA*
A Life in Pictures
events
Chivas Regal 25
continues its cooperation
with the elite of the film
world and the glamour of
the red carpet supporting
the Alfred Dunhill BAFTA
Life in Pictures events.
Chivas Regal 25 was
involved in four events
recently paying tribute
to legendary Hollywood
directors and actors
Viggo Mortensen,
James Cameron,
Quentin Tarantino and
Jean-Pierre Jeunet.
Chivas Regal 25
supported all the
events with a bespoke
bar serving Chivalry
cocktails. Each of the
film world celebrities
were also given a special
bottle of Chivas Regal
25 as a gift. BAFTA Life
in Pictures is just one
example of a programme
that includes activities
around the Oscars, the
Caesars and the Chivas
Brothers partnership with
the Cannes International
Film Festival.
* British Academy of Film
and Television Arts
New image
for Montana
In 2010, the Montana
range is sporting
a new label, showcasing
the mountains
that inspired its name.
The aim is to highlight
the link between
the name ‘Montana’
and New Zealand's
mountains, which
contribute towards
the character of these
wines. It's now more than
30 years since Montana
introduced the world to
Marlborough Sauvignon
Blanc. Montana was
the first to plant
Sauvignon Blanc in
Marlborough and create
a style of wine that has
since changed the taste
preference of consumers
around the world. The
new image for Montana,
will encourage wine
enthusiasts to take
a fresh look at this
pioneering brand's
range of quality wines.
The 2010
Jameson
Empire Awards
Ricard dressed
for the holidays
January 2010:
Becherovka
Lemond celebrates
its millionth litre
Campo Viejo
Crianza
at the Nobel Prize
in Sweden
Entreprendre
The Pernod Ricard
Magazine
12, place des États-Unis
75116 Paris, France
Tel: +33 01 41 00 41 00
actionnaires@pernod-ricard.com
It was a high-profile
evening on Sunday
28th March as the film
industry’s biggest and
most respected stars
turned out to celebrate
the 2010 Jameson
Empire Awards.
The awards, which were
hosted by comedian
Dara O’ Briain and
took in London were
honoured with the
presence of cinema’s
leading names, including
Gwyneth Paltrow,
Ian McKellen, Jude Law,
Patrick Stewart, Guy
Ritchie, Simon Pegg,
Ray Winstone, Jaime
Winstone, Aaron Johnson
and Mark Strong,
amongst others.
The awards ceremony
is deemed by many in
the industry as the most
fun awards in the British
movie calendar, making
it the perfect match
for Jameson.
The 2009 holiday
season was the perfect
occasion to launch two
new limited editions:
A new “Ricard
Collection” decked
out in a multitude
of golden droplets that
highlight Ricard’s amber
hue, and an exclusive
Ricard bottle designed
by Stéphane Calais,
a leading light on the
French contemporary art
scene, who transformed
the refreshing Ricard
experience into a palette
of dazzling colours in his
modern and luminous
style.
Fifteen months after
its launch on the Czech
and Slovak markets,
the millionth litre of
Becherovka Lemond
liqueur was produced.
This milestone number
confirms the success
of the newest brand
from Jan Becher.
The original intention
to distribute Becherovka
Lemond only on the
Czech and Slovak
markets has also been
reevaluated due to
demand from abroad.
Thus, the product will
soon be introduced
to markets in the former
Yugoslavia and Hungary,
and negotiations are
underway to launch
the product in Finland
and Denmark as well.
For it’s fourth consecutive
year, Campo Viejo Crianza
2006 graced the final
Nobel Prize gala,
the “Nobel Night Cap”,
in Sweden.
This celebration, which
follows the awarding of
the prizes and the official
dinner, welcomed a total
of 1,200 guests including
the award winners,
students, politicians and
key industrial and cultural
figures from Sweden.,
The exclusive presence
of Rioja wines at
the Nobel Prize ceremony
highlights their importance
on the Swedish market.
Indeed, Sweden is
the fifth biggest importer
of Rioja, with more than
four million bottles sold
in 2008 alone.
Publishing Director:
olivier Cavil
Publishing Manager:
Olivia Bourdy
Consulting, Design & Production
w w w. t e r re d e s i e n n e . c o m
Photo Credits:
Marc-André Desanges/Studios
Photos Pernod Ricard, Gerardo
Lazzaro, Marcelo Schmoeller,
Luciana Prezia, Michele Mifano,
Isabel Machado, Marcelo Bravo,
Ilan Rabinchinsky, Pool Creative
Agency, Forum Absolut,
Getty images and Corbis.

entreprendre No 55 • Spring-Summer 2010

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