(AOF) – Pernod Ricard has announced the conclusion of an agreement to sell the Scotch Whiskey Tormore brand and its distillery to Elixir Distillers, a company co-founded by brothers and entrepreneurs Sukhinder and Rajbir Singh. Tormore is an iconic distillery in the Speyside region, the historic heart of the Scottish malt industry. This listed building, built in 1960 and with a capacity of almost 5 million liters of pure distilled alcohol per year, is as famous for the quality of its scotches as for its architectural design.
Tormore is a well-known brand for its single malts, especially its 14 and 16 year old editions.
Alexandre Ricard, Chairman and CEO of Pernod Ricard, said: “Active management of our portfolio is an integral part of our long-term strategy. The sale of the Tormore brand and distillery is an extension of the recent announcement of investments in the Aberlour and Miltonduff sites, which will increase our Scotch production capacity to 14 million liters per year”.
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Key points
– World number 2, behind Diageo, in wines and spirits, born in 1975 from the merger between Pernod, founded in 1805, and Ricard, in 1932;
– Activity of 8.8 billion euros, balanced between Europe (29% of sales), the 2 Americas (24%) and Asia (41%, split equally between China, India and the rest of Asia) and contributed 63% by the 12 strategic and international brands, 18% by the 15 strategic local brands, 13% by the 4 prestige brands and the rest by the specialties and prestige wines;
– Business model based on a decentralized organization between the head office, 6 brand companies -Absolut, Chivas, Martell-Mumm-Perrier-Jouët, Irish Distillers, Pernod-Ricard and Havana Club- and 5 market companies supporting the brands international and local;
– Capital held at 16.3% (+22% of voting rights) by the founding family, ahead of employees (1.7%), Alexandre Ricard, CEO, chairing the 13-member board;
– Very healthy financial structure, with activity generating cash flow of €1.4 billion, with net debt of €7.2 billion, i.e. a leverage effect of 1.8 at mid-2021-2022.
Challenges
– “Transform & Accelerate” strategic plan with 4 accelerators -dedicated positioning for each brand, premium and luxury services, innovation and digital acceleration;
– Digital strategy aimed at making the group a “conviviality platform”: the collection and analysis of data in the service of the offer, on each market of the “right product at the right time, for the right consumer and at the right price” / the BIG ( Breakthrough Innovation Group) in charge of breakthrough innovations modifying the codes and perception of a product or brand by the consumer / the Kangaroo Fund open to collaborators contributing “disruptive” ideas;
– Environmental strategy “S&R roadmap 2030” in 3 points: zero net CO2 emissions in 2030 for clean operations and by 2050 for all activities / preservation of terroirs through regenerative agriculture, through partnerships with + 5,000 farmers and through projects to maintain biodiversity and reuse water/circular economy towards zero waste to landfill, 100% renewable electricity on production sites and 100% recyclable or compostable packaging by 2025;
– Segment not very dependent on household consumption, hence the rise in mature countries with strong positions in white spirits, rums and aniseeds (No. 1 worldwide), whiskeys and liqueurs (No. 2), cognacs, brandies and bitters (No. 3);
– Strong pricing power giving visibility to profits and preservation of margins.
Challenges
– Strong seasonality: 2/3 of the activity achieved in the first half (July-December), 1/4 in December and sensitivity of profits to sales in Asia and the Americas;
– Russia-Ukraine war: stoppage of exports to the USSR;
– Confirmation of the strong increase in sales on 1
er
half of the 2021-22 financial year;
– 2021/22 objective of strong sales momentum, improved operating margin
– 2021-2022 dividend of € and share buyback program reinforced to €750m.
A booming fair trade in France
This trade has almost tripled in five years, reaching 1.83 billion euros in 2020 in France. Based on a more profitable model for producers in southern countries, it was developed by the NGO Max Havelaar in 1988. The latter labels 90% of fair trade in the world with a total of 10.7 billion dollars in 2019 This trade is 95% food products. Coffee, chocolate, bananas and cane sugar account for three quarters of sales. On our territory, the NGO will label wheat from the Gers and milk from Poitou-Charentes. The French market is developing through mass distribution, which represented 54% of sales in 2020 compared to 42% in 2018. However, while organic represents 6.5% of consumption in France, the share of fair trade is limited to 1.5%.