FRANCE SPIRITS: Le Scotch rules OK

Indigenous French tipples Cognac and pastis have declined in popularity, while whisky sales are soaring. Spirits in general are on the up, thanks in no small part to home giant Pernod Ricard. By Patience Gould

Cognac is as quintessentially French as fish and chips are British – but that said, unlike the Brits’ favourite takeaway, the eau de vie, with sales worth e343.6 million (£233m) last year, languishes almost on the bottom rung of the spirits league in France, aside from Tequila. As such it is utterly upstaged by whisky.

In fact it is estimated that come 2010 the French will drink more Scotch than the British, while the British will drink more Cognac (and Armagnac) than the French.

In volume terms France is the number one export market for Scotch, accounting for 170.2m bottles at close of play last year – an impressive 10% increase on 2005, and worth £275m. These figures are a far cry from the state of play back in 2003, when exports slumped to £228m after a high of £236m the previous year. But then three factors combined to generate a climate of gloom: drink-drive restrictions were being enforced; there was an economic tightening of the belt; and the worry that the younger generation was not buying into the spirits arena.

Happily almost four years on these fears have proved groundless. Indeed all spirits, barring Tequila, are on the up and the total value of sales at the end of 2006 was over e12.9 billion compared with e12.79bn in 2005. All whiskies account for the lion’s share – almost 25% of the action, worth e4.247bn; followed by liqueurs, which notched up a total e1.738bn, these are the only categories to top the e1bn mark – that is aside from “other spirits”, and thereby hangs a pastis tale.

“Other spirits” has been in a sorry decline for years, but with a total value of e5.1bn, against e5.75bn in 2000, it is still the largest category. However, as it includes the aniseed-based spirit pastis, the ongoing fall highlights the salient fact that the younger generation is definitely not buying into this other quintessentially French spirit of its forbears.

It’s the typical scenario whereby a category fails to attract younger drinkers who want to drink something different to their parents. Pastis clearly falls into this Catch 22, and that despite ongoing efforts by the leading producers – notably Pernod Ricard – to jazz up its image. However, Pernod Ricard – itself a company formed when two of the country’s leading pastis producers joined forces back in 1975 – is in bullish mood when it comes to pastis.

For starters Pernod has declared 2007 the year for Pastis 51. As a result a new advertising campaign under the banner “51 tout un numero” has been launched, which is supporting two heavyweight promotions primed for both the on- and off-trades. For the on-trade, 51 le Club has been formed, whereby members, currently around 2,500 bar customers, benefit from point of sale kit as well as special gifts for consumers – all geared to tempting trial.

This summer Pernod reckons there will be at least 5,000 bar promotions geared to Rugby with French legends Serge Blanco and JP Rives fronting the action, which will ensure 51 is centre stage come the Rugby World Cup. For the all important off-trade a special “pack bleu” has been created, giving the brand added on-shelf impact.

While it’s early days there are some positive signs. Pastis 51’s depletions are 0.6% ahead over the last 12 months to the end of June and in the off-trade there has been a 1.5% upturn.

The fortunes are improving for the Ricard brand too, thanks to another massive campaign under the banner “Un Ricard, un Vrai!” The comprehensive initiative also includes the launch of special bottles created by leading designers, targeting collectors but at the same time enhancing the brand’s premium credentials. Ricard’s statistics are impressive; it has a 40% volume share and 50% when it comes to value – and evidently the company is determined to consolidate and improve on this standing. Now celebrating its 75th anniversary Ricard’s volume in France grew by 2.3% and by 3.5% in value in the 11 months ending May 2007.

Good show
Considering that the aniseed category grew by just 0.3%, both Pernod and Ricard have done well and certainly contributed to Pernod Ricard’s good showing in its home market. There the company, which through its acquisition of Seagram brands and subsequent takeover of Allied Domecq, does not just rule OK – with its portfolio of Scotch whiskies, rum, white spirits and Champagnes – it is the king. Across its portfolio, sales in France increased by 4% in volume and by 6% in value, amounting to e682m for its full 2007 fiscal year – figures which underline the success of the company’s strategy to concentrate on the premium aspects of its brands.

Its closest rival in France is La Martiniquaise. The company commands a turnover in the region of e550m. Across its portfolio it also boasts a clutch of number ones in various spirits sectors, but is best known for its Scotch whiskies Label 5 and the blended malt Glen Turner.  However, unlike Pernod Ricard, La Martiniquaise is not a multinational and the two operate at very different ends of the market spectrum; while Pernod Ricard has an internationally recognised brand portfolio, La Martiniquaise is, with the possible exception of its Scotch whiskies, essentially a domestic contender and its brands are positioned more at the competitive end and, in the main, through supermarkets.

As with most of northern Europe the action is heavily skewed to the off-trade and in particular the supermarket groups. The split is in the order of 70% to 80% in favour of take home, and by all accounts the supermarkets are much more inventive than their UK counterparts when it comes to promotions.

“In the UK it’s all about price cuts – that’s the beginning and end of it, but the French supermarket operators are much more keen on giving something extra back to the consumer, be it in terms of education or a gift, they are very interactive,” says one observer. “Also they like to offer an extended range of spirits – and that’s good news.”

Good news then for the French multinational and its two major sales forces Pernod and Ricard, which front the action on its key brands, notably the blended Scotch whiskies Chivas Regal, Clan Campbell and Ballantine’s. Clan Campbell is the number one in France, followed by Ballantine’s, and in third spot is Diageo’s J&B Rare, while Chivas Regal is strong in the premium blended arena, showing “good positive movement year on year”. While Pernod looks after the fortunes of Ballantine’s, and the single malt Aberlour, Chivas Regal and Clan Campbell, together with The Glenlivet, are in the Ricard camp.

The blend trend
“Scotch has recovered well in France; there were real worries in 2003, but it’s looking pretty healthy now, and the recovery is down to blends,” says Peter Moore, brand director, Ballantine’s. This is borne out by IWSR figures, which point to a 6% increase in the blended Scotch whisky sector, and it’s the relatively low priced blends that are driving the category growth, up 8% with premium and standard turning in a 4% upturn over the last two years.

Ballantine’s Finest, a brand which came into the Pernod Ricard stable via the takeover of Allied Domecq – is positioned at the top end of the standard sector – and with its new advertising campaign “Leave an Impression” is in very good shape. Indeed last year, compared with 2005, Ballantine’s, was “by far the best performer” of the top four brands turning in double-digit growth. “Ballantine’s has always had a consistently good reputation in France for quality,” says Moore. “The French consumer is extremely knowledgeable about Scotch and, as such, Ballantine’s is well placed.”

Added to this the advertising restrictions in France necessitate a lot of focus on the brand and with its rich heritage Ballantine’s has a great story for the French consumer. “The challenge was to adapt the campaign in France as you can only talk about the product itself,” says Moore. “We are running two key bursts, under the banner ‘Lesser votre Imprint’ using a painted picture which leaves an imprint on a poster. It’s a strong visual and has gone down well.”

While Ballantine’s Finest accounts for most of the Scotch whisky’s volume in France, the 12 Year Old is also available and there are “pockets of opportunity” for the 17 Year Old, which underlines the potential at the very top end of the blended sector. There’s good news for Pernod Ricard on the single malt front too, where its main contender Aberlour is in robust form and The Glenlivet is beginning to motor  – both on very different price platforms.

There are three key sectors based on price points in France’s malt Scotch sector: the blended malts, led by La Martiniquaise’s Glen Turner, which come in between e15-20; the mid-market brands, where Aberlour resides, between e20-25; and the super premium contenders at over e25, The Glenlivet ‘s territory.

“We’re still vying for the number one slot against Glenfiddich,” says Chivas Brothers brand director malts, Neil Macdonald. “The Aberlour brand has struck a chord with consumers, particularly since we started to develop the range and increase the number of premium aged expressions.” Two more Aberlour expressions are in the pipeline for October, one for the supermarket priced above e20 and one for the on-premise and cavistes.

Not surprisingly, Pernod Ricard has some big players here with the relaunched Beefeater Gin, as well as the vodkas Stoli and Wyborowa. The company also has the agency for CEDC’s Bison Grass Vodka Zubrowka – and France is now the brand’s biggest export market.

The French spirits market is not exactly in a state of flux but it would seem to be on the brink of change – and it can be no coincidence that it is its number one drinks company, now the second most powerful spirits force in the world, and the number one in Europe, which is opening up the French consumer’s drinks cabinet and expanding the national drinking repertoire.

© db September 2007