Pernod Ricard Revamps Management as Spirit Growth Quickens

(Bloomberg) -- Pernod Ricard SA shook up its management in a bid to improve its brand management and capitalize on an upswing in demand for Martell cognac and Chivas Regal Scotch whisky in China.

Christian Porta, chief executive officer for Europe and Latin America, will become managing director of global business development and all the brand heads will report to him, the company said Thursday. Pernod also raised its forecast for full-year profit growth to 4 percent to 6 percent. The shares rose as much as 2.6 percent in early trading.

Alexandre Ricard is making his biggest management reorganization since becoming CEO three years ago, promoting the company’s longest-serving executives to take a more holistic focus on the overall portfolio rather than just running individual brands. Chief Financial Officer Gilles Bogaert, who will take Porta’s former position, said there are very attractive new markets in Africa and Latin America that the company will target in the near-term.

CEO Alexandre Ricard has sought to modernize the company’s brand roster by acquiring fast-growing spirits including Smooth Ambler bourbon and Monkey 47 gin. He’s also divested liquors that aren’t central to its business, such as the Domecq line of brandies, to focus on the surge in U.S. demand for cognac and Irish whiskey.

Profit from recurring operations rose 5.7 percent on an organic basis to 1.5 billion euros ($1.8 billion) in the first half, which ran through December, meeting analysts’ estimates.

“The Scotch market is back in growth in China,” where the company could see double-digit revenue growth due to the later timing of the Lunar New Year, Bogaert said in an interview. Pernod Ricard’s investment behind brands such as Chivas Regal Scotch whisky in China as well as a partnership with the National Basketball Association has helped return the spirit category to growth, Bogaert said.

Martell cognac’s growth rate of 8 percent should continue through the second half of the year, Bogaert said. Brands such as Lillet are also performing “fantastically well.”

The “Asian engine is still firing,” wrote Alicia Forry, an analyst at Investec Securities.

Pernod Ricard is interested in more takeover opportunities this year, especially in the American whiskey segment, Bogaert said.

Jameson had organic sales growth of 12 percent, followed by a 10 percent increase in Martell, for which Pernod Ricard has a high-single-digit volume growth target this year. The Asian market is accelerating, especially in China and India.

Helene de Tissot, director of strategy and acquisitions, will become CFO. Most of the management changes take effect July 1.

Among other highlights:

• Jean-Christophe Coutures, head of Irish Distillers, to become chairman and CEO of Chivas Brothers as Laurent Lacassagne leaves Pernod
• Conor McQuaid, a vice president of business development, to become head of Irish Distillers
• Philippe Coutin, CEO of Pernod Ricard Rouss and Pernod Ricard Eastern Europe, to replace Philippe Savinel, who is retiring as head of the Ricard and Pernod Cos.
• Replacements for de Tissot and Coutin to be announced later
• Pernod Ricard forecast adverse currency shifts to strip 180 million euros from full-year earnings
• Impact of price increases in the second half will be felt later

--With assistance from Mara Bernath

To contact the reporters on this story: Thomas Mulier in Geneva at tmulier@bloomberg.net, Thomas Buckley in London at tbuckley25@bloomberg.net.

To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, Thomas Mulier, John J. Edwards III

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