Pernod: ‘big ambitions’ for American whiskey

7th August, 2020 by Nicola Carruthers

French firm Pernod Ricard has “big ambitions” for American whiskey after securing a “strong position” in the category through an acquisition spree, according to the company’s vice-president of marketing, new brand ventures.

Pernod Ricard acquired Kentucky Bourbon producer Rabbit Hole last year

Pernod Ricard made a number of moves in the American whiskey category last year. The group acquired Texas‐based Firestone & Robertson Distilling Co, maker of TX whiskey, as well as Kentucky Bourbon producer Rabbit Hole and US drinks group Castle Brands, maker of Jefferson’s Bourbon.

To “win in the US” and solidify the firm’s presence globally, the group needed a significant position in American whiskey, Daniel Clarke, vice-president of marketing, new brand ventures for Pernod Ricard, told The Spirits Business last month. “American whiskey is the second largest [spirits] category in sales behind vodka in US,” he explained.

“When we looked at our portfolio, we said that’s a position we needed to have a significant position in. That’s why we embarked on that journey strategically. Our objective is to win with a portfolio of whiskeys. That’s why we acquired several.

“We really think there’s a lot of American whiskey and Bourbon consumers with different interests and needs. By having a portfolio of brands and different products within those brands, that’s one of the best ways to address all those consumers’ needs.”

Late entry to American whiskey

Prior to the acquisitions in 2019, the only American whiskey brand in Pernod Ricard’s portfolio was West Virginia whiskey producer Smooth Ambler. The firm acquired a majority stake in the brand in 2017, marking the French group’s return to the American whiskey market following the sale of Wild Turkey to Campari Group in 2009.

Clarke said the group “absolutely recognised” that it came “a bit later into American whiskey” than its competitors Diageo and Beam Suntory. He said: “That’s why we’ve been quite aggressive about assembling the portfolio. We have big ambitions behind that. Our position in other spirits categories is much more solidified.” Clarke points to Absolut in vodka, Jameson in Irish whiskey and the group’s “strong position” in Tequila with Avión and Olmeca.

Clarke said the company is “constantly evaluating brands and partnerships in many spirits categories” and will “continue to be an industry consolidator”. He said: “We’re constantly looking at what other spirits categories consumers are most behind, and how can we have a solid position behind each of those categories.”

The American whiskey acquisitions, like the group’s recent purchase spree in gin, are part of Pernod Ricard’s Transform and Accelerate strategic plan, and all fit within the super‐premium and ultra‐premium segments. Clarke noted: “These segments are growing four times the rate of the market for spirits in general,” he added, and are “quite undeveloped”.

He said: “We’re really seeing growth in the 10-20% range in the super and ultra-premium category. There doesn’t seem to be any let up in demand for US whiskey. Consumers here find it a really exciting and engaging category. We have no reason to believe that the category will slow down at all.”

On market potential, Clarke said the group’s priority is the US but there are “green shoots in strong Scotch markets” such as Australia, Japan and Western European countries like the UK. He also noted the potential of “footprint states” such as California, New York and Texas, and traditional markets like Kentucky and Ohio.

In the current climate, Clarke said the focus will be on growing the brands in the off‐trade, and “leveraging digital to bring the experience to consumers at home”. Clarke also said there is an “innovation pipeline” for all of the brands, and the group has individual plans to ensure “production can keep up with demand”.

One challenge Clarke said of the category is the need to educate consumers. He said: “There is still a great job to do to educate the consumer in the category. One is dispelling the myth that Bourbon comes from Kentucky. It can come from anywhere in the US.

“We see a continuous fragmentation of the category with lots of new brands. So that’s always a  challenge for us to compete with those brands and make the case to the consumer that we have something unique to offer.”

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