Pernod USA CCO Details Innovation Strategy


Dear Client:

Pernod Ricard reported 4% sales growth in the US for the first half of its fiscal year, which is about in line with overall market growth. Moving forward, the company aims to outpace the US market and innovation is a key part of that strategy, Pernod Ricard USA cco Julien Hemard tells WSD. Below is our conversation with Julien, as you dear reader, are a fly on the wall.

Wine & Spirits Daily: What are Pernod USA’s main objectives this year?

Julien Hemard: The main objective we have really is quite simple, it’s to grow faster than the wine and spirits market. We estimate the market to grow at around 4% in value, and we have a goal to try to beat that.

WSD: What initiatives are in place to help reach that goal?

Julien: We have some priorities in our portfolio of brands, namely Jameson, Absolut, Martell Cognac, and our tequila portfolio those are the main priorities that we have, as well as Glenlivet, our single malt portfolio. And then we have some innovation, which for us, it’s becoming more and more important in terms of driving that growth. We estimate in the US that 40% to 50% of industry growth comes out of innovation every year, and we try to be at least at that level.

We’ve had some great successes in the past few years, with Absolut Lime, with Jameson Caskmates, with Martell Blue Swift, and this year with Absolut Grapefruit. So those innovations are helping us to beat the market.

WSD: Speaking of Absolut, a lot of the big vodka brands are still in decline. What’s in the works to help turnaround Absolut?

Julien: We, like every vodka brand, we have a challenge because most of the growth is captured by one brand, Tito’s. And indeed we’ve been trying with Lime two years ago and with Grapefruit this year, which have been quite successful, but it’s not enough to completely turn around the brand.

We’re working on a new campaign, we’re working on further innovation which are going to come out toward the end of this fiscal year and the beginning of next fiscal year, so I’m not able to tell you what they are. I can just tell you that we seem very excited by this new campaign and those new innovations.

WSD: Any other brand initiatives in the pipeline?

Julien: Actually, we’re just rolling out now our new Martell VSOP in the US. So that’s going to start rolling out actually from this month. And then, for our next fiscal year, we have a few more innovation on Chivas, on the Glenlivet. But it’ll be in the new fiscal year ahead.

WSD: Describe the company’s overall innovation strategy.

Julien: Well, it’s to either support one of our core brands, [create a] line extension around one of our core brands, or it’s supporting one of the growth categories, like Cognac or tequila. And every time [the goal] is to try to be disruptive, and to invest that scale.

To give you an example, Martell Blue Swift, which is a Cognac finished in bourbon casks, that has been a great success story for Martell in the US. It targets not only the traditional multicultural consumer but also the wider consumer group because of the bourbon finish. Those are the type of innovations that [fit into] both the growing category and bringing disruption to those categories.

WSD: Let’s talk about the New Brand Ventures division. What have they been up to lately?

Julien: New Brand Ventures, which was set up two and a half years ago, has been very busy. We are having a lot of success with Monkey 47, which is a high-end gin made in Germany, in the Black Forest. We purchased Del Maguey Mezcal – a very hot category. It’s small, but we’re having great success. And we’ve also purchased an American whisky, Smooth Ambler, which is made in West Virginia and we are also having a lot of success with that brand.

So those are we’d say the main three [brands] that we have, at the moment within the [portfolio].

WSD: Is there any white space in the portfolio that you’d like to fill?

Julien: Yeah, I mean there’s always white space from an M&A point of view. We are always looking at new opportunities and white spaces. I can’t comment on specific brands, but we are certainly watching very closely the US because it’s the top priority for Pernod Ricard globally and therefore, we have created a strategy to continue to bring out new brands in the categories where we see opportunity.

WSD: Recently, Pernod chief Alex Ricard announced a portfolio reorganization with the creation of the Specialty Brands division [see WSD 02-07-2019]. Can you tell me more about that?

Julien: Yeah, I think actually we were probably ahead of the group, from a global perspective. What they call Specialty Brands, is more or less what we call New Brand Ventures. It’s looking at gin, the high-end gin, the high-end malts, mezcal, liqueurs. Actually, we also have a successful liqueur in the US called Lillet made in Bordeaux in the south of France, and that’s been a great success in Europe and we are trying to replicate this in the US as the liqueur that is great for aperitif.

What the group is doing with Specialty Brands is more or less, exactly what we’ve been doing with our New Brand Venture portfolio.

Stay tuned for Part II of our conversation in tomorrow’s issue.

CONSUMER GROUPS CRITICIZE TTB’S PROPOSED BEV ALC LABELING REQUIREMENTS

Last year, the Alcohol and Tobacco Tax and Trade Bureau (TTB) proposed updates to bev alc regulations in an effort to simplify advertising and labeling requirements [see WSD 11-27-2018]. But consumer trade groups say the proposed rules fall “dramatically short” of truly modernizing the rules.

The Center for Science in the Public Interest, Consumer Federation of America and the National Consumers League together sent a letter on Friday to Treasury Secretary Steve Mnuchin criticizing the TTB’s recently proposed rules, mainly because they do not include requiring bev alc labels to disclose 1) alcohol content, 2) serving size, 3) calories, 4) ingredients and 5) allergen information.

This isn’t the first time the consumer trade groups have pushed for those labeling requirements. They also petitioned the agency in 2003, but they say not much has come of it.

In the TTB’s most recent proposal, they didn’t address the issues “due to complexity.”

“The TTB cannot and should not set aside the most pressing consumer issues on its docket. We urge you to instruct the TTB to withdraw the proposed rule and to issue a new proposal providing a mandatory, standardized declaration” covering the aforementioned information, per the letter. “Consumers of alcoholic beverages deserve the clear, consistent labeling that has long been available on other beverages.”

WSD BRIEFS:  

E&J GALLO WINERY ADDS GRUPPO MONTENEGRO TO PORTFOLIO. E&J Gallo Winery has been named the exclusive US importer for Gruppo Montenegro and its portfolio of Italian spirits. Amaro Montenegro, Select Aperitivo and Vecchia Romagna Brandy will be added to Gallo’s US luxury spirits portfolio, which also includes The Dalmore Single Malt Scotch portfolio, Diplomatico Rum, Jura Single Malt Scotch, Argonaut Brandy, and Germain-Robin Brandy. Select Aperitivo will be available for about $27 and Amaro Montenegro will retail for about $38.

WILLIAM GRANT & SONS TO LAUNCH HENDRICK’S MIDSUMMER SOLSTICE. William Grant & Sons announced the release of limited-edition Hendrick’s Midsummer Solstice, per Just-Drinks. It is bottled at 86.6 proof and will be available in the US this May.

HEITZ CELLAR NAMES NEW PRESIDENT AND CEO. Heitz Cellar has appointed Carlton McCoy as the new president and ceo. He joins the company from The Little Nell in Aspen, CO where he worked as wine director. “His reputation throughout the wine industry as one of the most recognized Master Sommeliers will certainly add to the rich history of Heitz Cellar,” says Heitz owner Gaylon Lawrence. “The quality and integrity our brand possesses are benchmarks that both Napa Valley and our customers have come to expect; Carlton will make an immediate impact building on that tradition.”

Until tomorrow,
Sarah

“They are ill discoverers that think there is no land, when they can see nothing but sea.” – Francis Bacon  

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