Alexandre Ricard, chief executive officer and chairman of Paris-based Pernod Ricard SA, is dealing with historic inflation and supply chain disruptions, but he still makes time to visit bars.
Undercover, of course.
These stealth visits to drinking holes are part of the CEO’s common-sense approach to expanding the 217-year-old business. (His grandfather founded Ricard, which merged with Pernod in 1975.) Earlier this month, the company reported revenue for the fiscal year through June of 10.7 billion euros ($10.7 billion) that topped analysts’ estimates.
Bloomberg recently spoke with the 50-year-old, who has been CEO for seven years, while he was in New York about how the owner of such brands as Absolut vodka and Jameson whiskey is battling rising costs and why post-pandemic social dynamics have been a boon for aperitifs.
I’ve heard that you used to go out to bars and chat with bartenders and customers. Have you gotten back to that as the pandemic has eased?
I just did some bar visits on a trip to Boston.
I always observe the back bar — what people are ordering, what’s on the menu, what’s promoted and what the prices are.
What’s an example of how bar hopping has really helped you?
In 2015, an investment bank presented us with a brand acquisition opportunity. There were a lot of power points, but they didn’t bring in a bottle to touch and taste.
I ended up going to 40 or 50 bars in different cities. Some bartenders had heard of it, but it was just being used as one ingredient in a cocktail. I did the math and the growth projections for the company just didn’t make sense.
At the same time, bartenders kept recommending a new gin. That was Monkey 47, which became my first acquisition as global chairman and CEO of the company.
One of the big questions about the economy is how much can prices go up before consumers start cutting back. Are you seeing shoppers trade down to cheaper options?
We increased prices in February, and we will be increasing again on October 1. But the increases are reasonable levels, to cover the cost of inflation. I don’t know if people will down-trade, but so far, so good. We haven’t seen any evidence yet.
Lots of inflation has been caused by rising labor rates, supply-chain disruptions and Russia’s war in Ukraine. But what else is causing higher prices?
There’s also more structural inflation that’s here to stay, created by energy use and the transition to a greener planet, as industries work towards 2030 and 2050 climate goals.
These won’t be free. For me, it’s not a cost. It’s an investment. In the last four months, we’ve made a $400 million investment to increase capacity and achieve zero net carbon environmental targets in Scotland and Ireland.
How has drinking behavior changed as the pandemic receded?
Around the world there’s a renewed interest in “moments de convivialite,” [translated as friendly gatherings]. The core purpose of Pernod Ricard is to unlock the magic of human connection.
For example, the aperitif hour — what we call the trendy chic aperitif moment. Lillet with soda or tonic is a drink that’s exploding globally. The brand has grown tenfold over the last 10 years and now sells more than a million cases every year. We plan to invest a lot behind Lillet.
In January, the company debuted Jameson Orange in the US. Why?
Our innovation strategy today is consumer driven. For example, I wouldn’t have ever thought of Jameson Orange.
Three years ago, we organized a consumer insight community in a number of different cities. They interact with mixologists, bartenders and ordinary people. The group had always existed, but it was siloed market by market. We made it more global, and we changed the culture to not just follow trends but anticipate them.
Orange as a trend is still new.
Editor’s note: This interview has been edited and condensed.
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