Pernod Ricard

History

The group Pernod Ricard was born in 1975 from fusion from the two French companies Pernod and Ricard, two marks of Apéritif S Anis be well-known.

The group knew strong a External growth whose most outstanding stage was acquisition in 2001 of the wines activity and spirits of the Canadian group Seagram, put with the biddings by Vivendi Universal following fusion Vivendi - Seagram in 2000.

Its turnover rises to 3,4 billion euros (2003), for a bottom line of 464 million euros. It employs a little more than 12.000 paid.

World number 3 of the spirits, Pernod Ricard negotiated in 2005 with its American ally Fortune Brands the repurchase of number 2, its British competitor Allied Domecq, not very dynamic conglomerate born in 1994 of multiple fusions, but holding strong marks like the Tequila Sauza, Malibu, Canadian Club, the cognac Martell, Kahlua, of the whiskeys like Ballantine' S, Aberlour, Long John, Chivas, … This acquisition makes of Pernod Ricard the second world group of wines and spirits (behind Diageo), with a turnover of 5,6 billion euros.

This group is in addition number one in Europe, with the Japan, the Mexico, the Brésil, in China and Russia.

List marks exploited by the group

White alcohols

Vodka S

Wyborowa
Żubrówka (aromatized with the Grass with the bisons)
Stolichnaya
Moskovskaya
Whodunnit Ice

Gin S

Cork Dry Gin
Beefeater
Seagram' S Gin

Tequila S

Olmeca
Viuda de Romero

Land-marks

Amaro Ramazzotti
Becherovka
Fernet Capri
Suze

Wines and aperitifs containing wines

Australian Vins

Jacob' S Creek
Wyndham Estate

New Zealand Vins

Church Road
Corbans
Stoneleigh
Jackman Ridge
Montana

Spanish Vins

Palacio of Vega
Azpilicueta
Will have
Campo Viejo
Marques of Arienzo
Real Sangria
Tarsus
Siglo
Viña Alcorta

Argentinian Vins

Etchart
Balbi
Colon
Graffigna
Santa Silvia

Sparkling wines

Café of Paris
Carrington
Jacob' S Creek
Chardonnay Pinot Black
Canei
Mumm Fermented Napa
Mumm Espumante

Champagnes

Champagne Mumm
Champagne Perrier-Toy

wine-based Aperitifs and sweet aperitif wines

Ambassador
Bartissol
Dubonnet
Sandeman
Byrrh
Ina

Others

Long Mountain
Almaden
Old Tbilissi
Tamada
XA

Aniseed aperitifs and Pastis

Henri-Louis Pernod
Ouzo Mini
Pastis 51
Pacific
Pernod
Pernod with the extracts of wormwood
Ricard

Cognacs

Bisquit
Martell
Renault

Brandies

Gift Pedro
President
Añejo Los Reyes
Azteco De Oro
Brandy Domecq

Liquors

Soho (alcohol Japanese, with savor of Litchi)
Dita (Japanese alcohol)
Zoco (Patxaran)
Ruavieja (Spain)
Kahlua (coffee liquor)
Tia Maria
Hiram Walker
Cusenier
Djangoa
Shaaz

Rum S

Malibu
Havana Club
Montilla
Lamb' S Navy Rum

Whiskeys

Scotch tape

Chivas Regal
Clan Campbell
Passport
Royal Salute
Special Something
100 Pipers
Ballantine' S
Imperial
Long John
Stewarts cream off Barley

Scotch tape Malt

Aberlour
The Glenlivet
Glen Grant
Strathisla
Longmorn
Glendronach
Scapa
Tormore

Irish Whiskey

Jameson
Paddy
Powers Gold Label

Bourbon

Wild Turkey
Furnace Pinks
Walkers Deluxe

Canadian Whiskey

Special Walker Old
Wisers

Others

Blenders Pride
Natu Nobilis
Royal Canadian
Dunbar
Royal Stag
Doble V

Management of the firm

Patrick Ricard, chairman
Pierre Pringuet, delegated general director

Board of directors

Patrick Ricard
Richard Burrows
Pierre Pringuet
Jean-Claude Beton
Jean-Dominique Comolli
François Gerard
Rafaël Gonzalez Gallarza
Francoise Hémard
Daniele Ricard
Gerard Théry
Lord Douro
Didier Pineau-Valencienne
William Webb
Beatrice Baudinet (Company Paul Ricard, permanent representative)

Executive committee

Financial data

Submitted to the general meeting 2005:

Sales turnover 2004:

million euro

Turnover:

million euro

Stockholders' equity:

million euro

Stock exchange data

Shares quoted with the Paris Bourse
Member of the index CAC 40
Code Value ISIN = FR0000120693
Face value = euro
Numbers of action at January 1st, 2005:

:70484081 titles

Capitalization at January 1st, 2005:

:8000 million euros

Many daily transactions:

titles

Principal shareholders:

Ricard SA (13%)

JP Morgan (10%)

Fusion Pernod Ricard/Allied Domecq

April 21st, 2005, Pernod Ricard launches a friendly O.P.A. on one of its main competitors, the British group Allied Domecq. They are two specialized companies in the distribution of spirits and wines. Before this operation, in the sector of the spirits, Pernod Ricard was the second world group in terms of world volumes with 50 million sold cases and 13 marks appearing among the 100 most sold marks. Allied Domecq was the third world group with 43 million sold cases and the same number of the most sold marks appearing among the 100.

For Pernod Ricard, it is about an important strategic evolution after the repurchase of the Canadian group Seagram in 2001. To acquire Allied Domecq, Pernod Ricard was combined with Fortune Brands, an actor of the market of the wines and spirits. Pernod Ricard, after the advertisement of its O.P.A. has to face an attempt at against-offers Brands Constellation. This threat quickly appeared not very important because of the strong debt of Brands Constellation. Diageo, the leader of the market also will benefit from fusion thanks to an exclusive dealing agreement with Pernod Ricard. It will receive credits of Allied Domecq in the sector of the wines.

June 30th, 2005, the shareholders of Pernod Ricard accept with the quasi-unanimity the merger plan. July 4th, it is with the turn of the shareholders of Allied Domecq to give their agreement for fusion. July 26th, 2005, Pernod Ricard becomes officially owner of Allied Domecq.

Fusion must make it possible the new group Pernod Ricard to consolidate its second world spirit place and to approach the world n°1: Diageo, like becoming n°1 world sales of spirits out of the United States. The new group will sell 77 million cases of bottles of 9 liters (against 50 million before fusion) and will count 20 key marks (against 13 before fusion). Fortune Brands will recover part of the credits of Allied Domecq in the field of the spirits. The new group Pernod Ricard will acquire key marks in the sector of the spirits: Ballantine' S which is the 11th world mark in term of sale of spirits, Malibu which is a mark universally recognized and which knows a strong growth in the United States, Beefeater, Kahlua which is the world n°3 liquors and Stolichnaya which is a vodka mark in very strong growth only distributed to the United States. The acquired key marks know important growth rates between 2003 and 2004 (between 2% and 17%). The offer of Pernod Ricard will diversify. The group hopes to gain 21% of market share for the scotchs, 10% for the others whiskeys, 11% for white alcohols and rhums, 21% for liquors, 17% for anises and land-marks and 8% for the cognacs.

In the sector of the wines, fusion will make it possible the new group Pernod Ricard to place itself like a potential leader with 18 million cases of 9 liters sold per annum instead of 11 million cases. Pernod Ricard will exceed its Diageo main competitor and will become the 4th world group in particular behind Constellation. Thanks to Allied Domecq, the wallet of Pernod Ricard, hitherto mainly made up of the Australian wines Jacob' S Creek, grew rich by New Zealand wines (Stoneleigh), American, Argentinian and Spanish. The wines of Allied Domecq knew on average a growth of 8% between 2002 and 2004. The new group also recovered champagne marks (Mumm, Perrier Toy) which are a strong symbol of the luxury. Mumm is the world n°3 besides champagnes.

The new group will reinforce its world presence with a critical size on the main markets. Pernod Ricard will be n°1 in Europe, Asia and Latin America and n°2 in North America and Africa. The group will reinforce its market shares on the Western markets. The group in particular will develop its activities in Spain and in the United Kingdom. In Spain, it will especially become n°1 thanks to the arrival in its wallet of the mark Ballantine' S. the number of sold cases will double, passing from 3,6 million to 6,9 million. Pernod Ricard will become n°2 in the United Kingdom thanks to the acquisition of certain Spanish wines. The number of sold cases will pass from 0,8 million cases with 1,7 million. Before fusion, Pernod Ricard sold 12% of its products in North America whereas after fusion, the objective is to reach 26%. The American northern market is in full growth. The acquisition of the marks Malibu, Kahlua and Stolichnaya which know rates of strong growth in the United States will make it possible to reinforce the presence of the group in North America. To the United States, Pernod Ricard will become the 4th group in volume (instead of the 8th place before fusion) and 3rd in value. Sold volume will double while passing from 6 million cases to 12 million cases. The market share volume on this market will pass from 5% to 10%. In Mexico, the market share of the new group explodes. It passes from 2% to 28% and makes it possible Pernod Ricard to largely dominate the Mexican market. The situation is similar to Canada where the market share of the group passes from 2% to 20%. Lastly, fusion makes it possible the group to have a position of leader in the markets at strong potential of development. Pernod Ricard becomes n°1 in Brazil, in Argentina, in India, in China and Thailand. It becomes also n°2 in South Korea, gone in strong growth in particular on the scotchs. Fusion will make it possible Pernod Ricard to sell 1,3 million spirit cases instead of 0,2 million cases. The market share will pass, on this market, from 5% to 34%.

At the financial level, one awaits strong synergies thanks to fusion. They are evaluated to approximately 300 million euros is 5,4% of CA of the new group. The leaders are very trustful in the realization of these synergies. Indeed, in 2001, Pernod Ricard had acquired a competitor named Seagram. This acquisition had allowed a strong growth within the group Pernod Ricard. The company will be able in particular to profit from the Seagram experiment. The new group almost will double of size. The impact on the turnover is important. Before the operation, CA of the group was of 3,5 billion euros. The turnover of new Pernod Ricard will be 5,6 billion euros, that is to say a rise of 2,1 billion euros. The impact on the operational result is even more impressive. Before the operation, the RO of the group was of 0,7 billion euros. Fusion should increase this result by 1 billion euros but should involve additional costs with height of to 0,3 billion euros. With final, the RO of the group should double to reach 1,4 billion euros. Fusion should allow a significant decrease of the costs of structure. In 2001, after fusion with Seagram, the ratio Costs of structure/Turnover reached 23%. In 2004, before the operation, it did not reach more than 19%. Lastly, after the operation, one thinks that it will be only of 16%. Degearing should be fast. Indeed, Pernod Ricard will resell certain credits at Fortune Brands and will separate from certain activities of Allied Domecq, which will not involve synergies. Allied Domecq in particular will separate from QSR, a wallet of marks in the sector of fast-food industry and of Britannia, bottler of Pepsi-Co.

Before fusion, the organization of the group Pernod Ricard was decentralized. Fusion will accentuate this phenomenon of decentralization. Pernod Ricard chose decentralization in order to join local and world dimensions. According to the leaders, it is a big factor of motivation and effectiveness. “It should a comprehensive strategy then be adapted according to the local needs and of the practices of each country. It is not in Paris that one can know how reacts a South American consumer”. According to the chairman of Pernod Ricard, decentralization is essential to satisfy the customer. The group is organized around holdings and of subsidiary companies. In this system, the holding concentrates on strategic piloting and the control of the activity of the group. The subsidiary companies are in charge of the operational decisions on the ground. There exist two types of subsidiary companies:

of the producing companies owners and persons in charge of the marks
of the distributive firms of these marks on the key markets

Operational decision makings are carried out on the level of the owners of marks and its subsidiary companies of distribution. The owners of marks develop the strategy as regards marketing and the subsidiary companies of distribution adapt this strategy to the national markets. The operational subsidiary companies are thus autonomous and responsible. That enables them to approach the consumers and to meet the individual needs for the cultures. The principal companies owners of marks are: Ricard, Pernod, Chivas Brothers, Irish Distillers, Malibu-Kahlua, it joint venture International Havana Club… “It is necessary to react quickly on the markets. This is why the persons in charge of subsidiary companies of Pernod Ricard in the world act as of the owners who act as if they directed their own company”.

Polemic

To promote its products, the group alcoolier Pernod Ricard sponsored in France of the evenings coeds which cause each year a considerable number of young victims, going until causing deaths of young students, thus circumventing the French law because the company sponsored step directly evenings on the campus since the establishment is not a bar. Nevertheless, in Paris, in October 2002, the group Pernod Ricard and its French subsidiary companies decide to set up, with the Management of Safety and the Road traffic, a bearing partnership on sober control, within the framework of the countryside " that which leads, it is that which does not drink ". A charter is signed to this end by Isabelle Massin, interdepartmental deputy with the Road safety, with the presidents of the group and the two French subsidiary companies. In the evenings with which their marks are associated, in discotheques or bar of environment, the companies of the group set up a device with strong visibility including/understanding of the posters, of the information memoranda, the key-ring as well as the free distribution of éthylotests. Drinks without alcohol are offered to the indicated sober driver which is, moreover, identified by a bracelet. In the evenings of students, it is proposed to the organizers to set up systems of location upstream of the sober drivers, of Co-conveyance or of raccompagnement, with the assistance of associations specialized such as Voiture & C° and Entreprise and Prevention. Moreover, the Ricard companies and Pernod reinforce the plan of " in parallel; prevention of the road risk in company " intended for their clean paid and more particularly for the thousand commercial ones and users of the automobile fleet of the group.

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