Pernod Ricard UK outlines future without wine

Although the sale of Pernod Ricard’s wine business to Accolade’s new owners will not be completed until next spring, the French group’s UK arm is already working on how to make up for the loss of a significant part of its business. Ron Emler reports.

Over the past decade Pernod Ricard UK has more than doubled its share of the UK on trade to about 16%, rising from 15% earlier this summer, a feat of which Julia Massies, managing director of the UK business, is proud — as she points out that it has been achieved in a declining market, which was hit by excise duty rises and pressure on consumer spending.

Twenty years, ago wine generated more than half of the French group’s sales in Britain but today it comprises 20% of PRUK’s turnover, through brands such as Jacob’s Creek, Campo Viejo and Brancott Estate.

So the disappearance of those brands from its portfolio next year will be a blow, even though they deliver the lowest margins.

Spirits-driven

Massies points out that in the UK Pernod Ricard has become increasingly a spirits-driven business and that efforts are being redoubled to “make sure that the consumer chooses to go out and chooses our brand”.

“That’s a fight, and we are doing lots of work with our customers to make sure that we offer the perfect pour and have the perfect set ups”.

“We are very much concentrating on favourable growth,” she said, but added that she expects Christmas this year will be characterised by “very aggressive price fighting” following the public’s bargain-hunting last year.

Excise

She was particularly critical of last year’s excise duty rises “which surprised and dismayed us”.

It was a” lose-lose” situation because it cost the consumer on average an extra £1 per bottle and Treasury receipts fell by £300m as a result.

“Consumer sentiment is still negative, but it is improving,” she said.

Helene de Tissot, Pernod Ricard’s Finance Director, said that as part of the sale of the wine brands to Accolade, negotiations were ongoing to ensure a smooth handover, including distribution systems and to review any potential implications for staff.

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