Spirits manufacturer Pernod Ricard implements reorganization strategy due to decreasing sales figures
Pernod Ricard is giving its business a makeover, shifting towards a more streamlined approach by organizing its brands into two major divisions following a grim phase for the spirits industry, a sneak peek at internal presentation slides reveals. The downturn in sales, coupled with reduced consumer spending, international trade tariffs, and economic turbulence in key markets like China and the US, has hit the world's second largest Western spirits maker hard.
Alexandre Ricard, CEO of Pernod Ricard, hinted at an initiative dubbed "Tomorrow 2," aimed at strengthening their organizational efficiency. According to a staff memo, Ricard wants to simplify the company structure and as a byproduct, streamline their operations. In an address to staff, he hinted at departures as part of the restructuring without elaborating on the precise impact on job numbers.
The proposed Gold division will include premium champagne brands, Martell cognac, and Irish whiskey Jameson. On the other hand, the Crystal division will house Havana Club rum, Absolut vodka, and several French aperitif brands, catering to more mainstream or accessible spirit consumers. The integration of these brands into their respective divisions is slated for implementation in the last three months of 2025, subject to consultations with social partners and employees.
Pernod Ricard refrained from commenting on the specific job losses or the reorganization of brands into two units but did point out that the changes would entail consultations with employees and social partners where necessary.
Competitors like LVMH's wines and spirits division and Diageo have also scrapped or curtailed ambitious sales targets in recent months due to the reverse in the Covid-19 pandemic-induced sales boom. With declining sales and tariffs impacting investor sentiment, Pernod Ricard's shares have fallen approximately 50% since the start of 2023.
In essence, Tomorrow 2 aims to create a leaner, more agile Pernod Ricard in a challenging market where falling sales and regulatory hurdles are the order of the day.
- The restructuring initiative, "Tomorrow 2," at Pernod Ricard is intended to bolster their organizational efficiency, particularly in the finance aspect, as Alexandre Ricard seeks to streamline operations and simplify the company structure.
- The upcoming reorganization of Pernod Ricard's brands into two major divisions, the Gold and Crystal, signifies a strategic move in the industry to cater to both premium and mainstream consumers, thereby adjusting their business model to adapt to the present economic climate.
