Pernod Ricard ‘very disciplined’ after Allegro completion

It is “business as usual” at Pernod Ricard following the completion of its €150 million (now US$167m) cost-cutting programme Project Allegro last year, according to the company’s CEO.

Speaking to The Spirits Business, CEO Alexandre Ricard said the final financial impact of Allegro was registered early last year. Launched in 2014, the operational efficiency programme included a 5% reduction of Pernod Ricard’s global workforce, with 900 jobs scrapped.

According to Ricard, Project Allegro followed a business diagnostic of Pernod Ricard that begged the question: “Is our global organisation fit today for the long-term?”

He said that following a number of high profile acquisitions and mergers, the company needed to delayer.

The CEO added: “Over the years we experienced significant growth, both organically and through acquisitions, and absorbed part of the Seagram’s business, the Allied Domecq business, The Absolut Company, and so on.

“And along with this humongous growth came in came probably a few complexities, layers and some bureaucracy; and that’s fine. It happens when you are focused on growth.”

However, Pernod Ricard’s executive committee decided to strip layers from the business to enable “faster decision-making” and “really go back to [its] roots of entrepreneurship,” Ricard added.

“Ever since Allegro, it has to be very clear from a structure cost point of view, we have been quite disciplined,” said Ricard.

“Now it’s business as usual, and for me, business as usual means the organisation is a living organism. It evolves every single day. It has to be flexible and agile.”

Pernod Ricard has increased its focus on operational efficiency with a plan – announced in August last year – to extract €200m (US$258m) in profit and loss savings and a further €200m in cash savings.

The funds will be gathered through changes to media buying, procurement, stock forecasting and by discontinuing a number of under-performing SKUs. A significant portion will be reinvested into the business.

To read our full interview with Alexandre Ricard, see the June 2017 issue of The Spirits Business magazine, out now.