Strategic Analysis of the brand of liquor Pernod Ricard

Résumé du document

Pernod-Ricard is a French company which produces alcoholic beverages. It was established in 1975 with the merger of two French anise-based spirit producers namely Pernod and Ricard.

During the initial years, the company's strategy was to strengthen its global position by building a strong international supply and retail network. Soon the company started to expand, purchasing local companies in order to enter foreign markets. Since this strategy was very successful, Pernod-Ricard started a series of big mergers to settle its position as one of the leading alcohol industries' in the world.

Pernod-Ricard is considered as the biggest (along with the British Diageo) alcoholic beverage producer in the world. It sells 97 million boxes of alcohol a year (one box being 9L), its revenue amounts to €7.2 billion and its profit is estimated to a comfortable €850 million. Pernod-Ricard employs around 19,000 people all across the globe.

The most recent and most important acquisition in the PR history would be the acquisition of the Swedish giant V&S. As a matter of fact that acquisition was aimed at improving the placement of PR in the Northern European countries and in North America. Indeed, the most well-known brand owned by V&S is the famous vodka brand Absolut which is a bestselling beverage in the US (5 million boxes sold in 2007).

It is of primary importance for any company which plans to enter a foreign market, to make an estimation of that market and to understand the trends and tendencies of the international environment it plans to operate in. Every fact and data can help in a different way to forecast challenges and difficulties, to find out opportunities in the market and to form a relevant strategy. There are different levels and numerous environmental factors for a company but here we would be focusing on so called foreign elements such as demographic, economic, technological, cultural, institutional factors as our work is devoted to Pernod-Ricard and in particular to its entry to the US market. In this part, we are going to be discussing various elements of the international environment in the US.

Extraits

[...] A socio-demographic analysis suggests that gender and socio-economic status are the most relevant factors in alcohol consumption. Significantly more men than women seem to have drunk alcohol in the past year. One lately noticed that the overall spirits and beer consumption has increased in European countries while the wine consumption decreased. In France, regular wine consumers are replaced by young and occasional consumers. The reasons for Pernod Ricard success are the following ones: -The company's products meet the regional preferences and expectations: Premium brandy and cognac in Russia, whisky and cognac in Asia -Attractive high quality products company-owned high-level distribution network THE OLI-Model The ownership of Pernod Ricard: In the alcoholic beverage field, the group offers a huge range of products such as Whiskies, Anis-based spirits, Liqueurs, Cognacs and brandies, White spirits and rums, Bitters and Wines. [...]

[...] We will now look at them in details for Pernod-Ricard and the wine and spirits market. Rivalry among competitors The wine and spirit industry is concentrated, there are only few actors and Pernod Ricard is the world number two company on this market, right after Diageo. So rivalry is not so high. The market is in growth, especially in United States of America which is the biggest market in size and value with gains of by value this year. Entry barriers In the wine and spirit market there are strong entry barriers. [...]

[...] As our work is devoted to the Pernod-Ricard company and in particular to its entrance to the US market in this part we are going to present some information concerning the elements of the international environment of the US The Demographic Environment On October 28th 2009, the United States total resident population accounted for 308 million people. According to the official data it is a very urbanized nation, with 81% of the population residing in cities. The total fertility rate in the United States estimated for 2008 is 2.1 children per woman, which is roughly the replacement level. In the meantime, the U.S. population growth is still among the highest in industrialized countries. [...]

[...] In other places, for instance in Arabian countries, young people cannot drink any alcohol, the same happens for women because of the religion Alcohol consumption patterns change over time. Long-term changes in alcohol consumption are affected by changes in affluence, amount of leisure time, social misery, industrialization, and urbanization. The regions Europe is the region with the highest alcohol consumption level in the world. The average annual consumption is 7,3 liters of pure alcohol per inhabitant and per year. For cultural reasons, in some countries respondents tend to underreport their consumption. [...]

[...] This strategy is efficient but also expansive because of the purchasing of thriving companies. The company can not afford to take over ailing companies to get into new markets. For instance, Pernod Ricard owns plenty of very famous and successful brands such as: Jamesson (Irish Distiller), Chivas Regal, Ballantine's, Mumm, Absolut Vodka According to this explanation, we can say that Pernod Ricard has a Polycentric Orientation because its subsidiaries are established in overseas markets, each subsidiary operates independently of the others and establishes its own marketing objectives and plans. [...]