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Pernod Ricard to invest in RTDs

Pernod Ricard has a 4.2% share of the ready-to-drink (RTD) market in the UK, with “plenty of headroom to grow”, according to the company’s commercial director.

Malibu canned RTDs
Pernod Ricard released RTDs for its Malibu rum liqueur brand last year

In the company’s fiscal 2022 results released on 1 September, the firm recorded ‘very strong’ double-digit growth for its RTD portfolio, with ‘rapid development’ in the US.

Pernod Ricard has released a number of RTD line extensions for its core spirits in recent years, including Malibu canned cocktails, Jameson Ginger & Lime, and a trio of Beefeater Gin and Tonics.

During a roundtable for the firm’s fiscal 2022 results on Monday (5 September), UK commercial director Ian Peart said the RTD sector has become “extremely dynamic and scalable” in the country and is a nine million nine-litre case market. The majority of RTDs are sold in the off-trade, he added.

“It’s growing at 5% on an MAT [moving annual total] basis, compared to BWS [beer, wines and spirits] in the off-trade, which is -10%,” Peart highlighted.

Pernod Ricard has achieved a 4.2% value share in the UK for RTDs, an area the company will continue to invest in with a “strong innovation pipeline”, said Peart.

Peart also noted that the RTD sector was starting to see segmentation with different price tiers, as well as canned cocktails.

“We’re interested in the premium part of that, our current portfolio is about 20p a can above the average price within the category,” he noted. “That is something we will continue to follow. There’s lots of opportunities for exciting innovation. It’s a way of supporting spirits brand launches.”

Attracting new drinkers

Jean-Etienne Gourgues, chairman and CEO of Pernod Ricard’s Scotch whisky arm, Chivas Brothers, said the RTD category could also help drinkers move into Scotch.

“RTDs are driven by the gin category and vodka category,” he said. “We will look at where we can help to bring in new type of consumers into the Scotch category, like Ballantine’s and Chivas, [but] it’s not a 2022 or early 2023 priority.”

He added that it could help to gain consumers, such as Gen Z, in South Asia and Latin America, “where the Scotch category is difficult to crack”.

Pernod Ricard also aims to become the number-two drinks supplier in the UK.

“We’re number two in the on-trade from a spirits point of view, and number three in the off-trade; we have the desire to be the clear number two and close the gap,” explained Peart. “We will invest more money in our brands, in building long-term brand equity as part of our premiumisation strategy.”

With Liz Truss stepping into the role of UK prime minister this week, Peart is hopeful the government will provide more support to the hospitality sector as it deals with rising energy prices, as well as focus on the review of the alcohol tax system.

The UK government’s planned review of alcohol duty was paused, with wines and spirits facing “very high taxation” and it could be impacted further by inflationary increases, he noted.

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