Pernod Invests in Upstart Drinks Maker Sovereign Brands
(Bloomberg) -- French spirits maker Pernod Ricard SA bought a minority stake in Sovereign Brands, a New York-based company that has come up with innovative alcohol labels such as Bumbu rum, in a partnership to co-design products and expand in the U.S.
The deal is part of a long-term sales and marketing collaboration and both companies will remain independent, Chief Executive Officer Alexandre Ricard said Wednesday in an interview. He declined to say how large the investment is.
Pernod Ricard shares rose as much as 3.2% after the distiller also said business returned to 2019 levels and forecast strong global sales momentum will continue this fiscal year. The reopening of bars and restaurants and burgeoning demand for cocktails at home is buoying sales and profit.
The U.S. is becoming an increasingly important market for the French company, with sales there exceeding $2 billion for the first time in the 12 months since June. Sovereign Brands has been creating new drinks since 1999, when brothers Brett and Brian Berish founded the company, which also makes Luc Belaire. That brand is a relative newcomer that has become the best-selling French rosé wine in the U.S.
Another Sovereign Brands-developed brand, Armand de Brignac, recently made news when LVMH bought Jay-Z’s 50% stake in the Champagne producer.
Profit from recurring operations rose 18% to 2.42 billion euros ($2.9 billion) in the year through June, ahead of analysts’ estimates. The company forecast sales growth to continue after a 10% organic gain last year. CEO Ricard said comparisons will become gradually more challenging after a “dynamic” first quarter. He also forecast a gradual recovery in the travel-retail market.
“From a business standpoint, we are emerging much stronger than before,” CEO Ricard said by phone.
The company also said it will restart a share-buyback program this year.
©2021 Bloomberg L.P.