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Pernod-Ricard's Axis of Development

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Pernod-Ricard's Axis of Development
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Guylain MARINO (32657)

I) Pernod Ricard’s axis of development II) The firm’s strategy III) Implementation of the strategy IV) Management of the Chinese subsidiary V) Results and perspectives (SWOT Analysis)

Introduction

Created in 1975 through the merger of Ricard and Pernod, this French spirits giant is specialised in making and distributing wine and distilled beverages.

This is the second group worldwide in this division, just behind Diageo and before Bacardi-Martini thanks to the acquisition of Vin & Sprit which produce especially the vodka Absolut in 2008. In France the group is a leader in the liquor sector with more than 27% of the cumulated market share. The company generates most of its sales in Europe, followed by Asia.

1. Pernod-Ricard’s axis of development

The market maturity of the developed countries encouraged Pernod Ricard to target new geographical areas with high potential. The company accelerated its deployment in the emerging countries, especially in Asia.

The Asia-Pacific area (beside Japan) counts for a growing part of the world luxury market : 14% in 2009 and only 11% in 2006. The booming Chinese economy maintains high the demand in luxury products of the Asian area. China counts 360 000 millionaires in dollars (5% of the world population of millionaires). The rapid increase of the living standard leads the Chinese to a showy and statutory consumption, synonymous with success. Nowadays, according to Pierre Pringuet, Pernod Ricard’s CEO, “China is the second-largest market of Pernod Ricard. Second to the US.”
The luxury image of the Pernod Ricard’s products meets success among the young Chinese generation (20 – 35 years old), which is the heart of the clientele of the premium brands in China. The company targets also other countries in Asia such as South Korea, Thailand or India.
In opposition to its strategy in other Asian countries, the company does not own local brands in

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