Pernod to make redundancies in cost-cutting bid

Pernod Ricard has admitted job losses will be likely as it embarks on a strategy to improve business processes and save €150 million over the next three years.

Pernod Ricard will make redundancies in a bid to save €450m over the next three years

The French drinks group, which owns the Chivas Regal, Absolut and Glenlivet brands, announced the launch of Project Allegro in its half-year financial update last week, in a bid to improve operational efficiency within the organisation.

With a three-pronged approach aimed at “simplifying, prioritising and mutualising” Pernod’s operations, the group has set a target of saving €150m over the next three years.

Project Allegro is designed to help Pernod “improve organisational efficiency in order to generate future growth, seize new opportunities (particularly innovation and diital), and increase the speed of execution”.

The group has suggested that cost-cutting and efficiency measures could include the sharing of IT infrastructure among regional offices; a reduction travel costs and other expenses; and the encouragement of swift business decisions, which could enable the group to execute new initiatives faster.

At a press conference in London this morning, CEO Pierre Pringuet admitted that job losses will also be a part of Project Allegro, although the group has added the measure will be a last resort.

“Let’s be honest, there will be redundancies but how many is absolutely premature to answer,” he said.

“Today we set up various taskforces with altogether 200 people working in more than a dozen taskforces in order to really design the practical terms of what those principles mean. We also set an ambition of €150m annual savings to be reached in three years from now.

“That is basically in overheads; it could be external fees or travel expenses. It also means some savings on people themselves.”

The savings made from Project Allegro will be “partly reinvested to support brand development”.

In its half-year results for the 2013/14 financial year, Pernod also readjusted its forecasted profit growth from 4-5% a year, to 1-3%, following a lacklustre performance from the Chinese market.