Pernod Ricard makes duty-free a priority in consolidation year

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Decentralised management and two new brand-holding companies Chivas Bros and Martell will be key this year as the Pernod Ricard group continues to cement its position in the super league of drinks companies. Pernod Ricard World Trade (PRWT) born out of World Brands (TRW 25/10/01) has been entrusted the task to act as the coordination business for the global travel-related trade and to ensure the reformed group captures further sales in the channel in 2002. Duty-free distribution will continue to be devolved to regional companies, with PRWT acting as the interlocutor for the market.

Local roots and global reach were the main themes at a press conference today as the group announced organic growth in sales of wines and spirits of 8.2% in 2001 to reach Eur1.9bn ($1.7bn). Duty-free accounted for 7% of sales of the division last year, a percentage which is set to rise. France posted a sales rise of 11%, Europe 8.4% and rest of the world 46%.

Group joint managing director and Irish Distillers ceo Richard Burrows told TRW: "Before Seagram we had a modest presence in duty-free, partly arising from the loss of the intra-EU business. Seagram was the second-largest supplier to duty-free worldwide. This is an important channel for us to maintain and the focus of Chivas and Martell will allow us to develop outside Europe."

The financial performance of Pernod Ricard also confirmed that the integration of Seagram brands has been a smooth process, said Pernod, and the group reported almost no integration problems in the regions, due in part to its business model of decentralisation.

Operating margin in the wine and spirits division increased in 2001 to 17.9% from 17.2% The group also retained more of the Seagram brands than originally intended such as the Seagram Coolers business. Two further new holding companies Pernod Ricard Central & South America and Pernod Ricard South Asia (including the Gulf) complete the new structure. Meanwhile the delays with regulatory bodies and the length of time taken to complete the Seagram transaction took its toll with both Chivas and Martell posting a 9% decline in sales last year and carrying forward an inventory surplus from a difficult handover month in December.

• For an interview with PRWT ceo and chairman Gilles Cambournac see the April 15 issue of Duty-Free News International.