Norway’s largest spirits producer Arcus-Gruppen says it hopes to get its Nordic aquavit business 'moving again' with the acquisition of three aquavit brands from Pernod Ricard for €103m.
In an announcement today, Pernod Ricard said the deal – for Danish aquavit spirits brands Aalborg (pictured) and Brøndums, German brand Malteserkreuz Aquavit and Danish bitter brand Gammel Dansk – was in line with its group strategy focus on “priority brands”.
Pernord Ricard added that, subject to approval from the relevant competition authorities, the deal (which also includes the Aalborg production plant in Denmark) was expected to be completed by the third quarter of 2012/13.
Strong in aquavit
Asked why the acquisition was important for Arcus-Gruppen (2011 turnover: NOK 1.8bn or €241m) communication manager Terje Thurmann-Moe told BeverageDaily.com: “We are one of the strong aquavit producers in Europe, but our main brand Linie has seen a slight decline in recent years.”
In its 2011 annual report Arcus-Gruppen noted spirit volume sales declines across all its main markets – Norway, Finland, Denmark, Sweden – as a result of significant duty increases in recent years, with the firm concentrating on building margins through premium products.
“So this deal is about getting aquavit moving again by developing strong Nordic brands. In that respect these are important acquisitions for us,” Thurmann-Moe said.
He said that the firm produced around 30% of all the spirits sold in Norway, but only 3% in Denmark, and that the aquavit acquisitions would complement Arcus-Gruppen’s existing premium aquavit brand Linie, which is sold in Denmark, Sweden and Germany.
In this respect regulatory approval of the deal shouldn’t be a problem, he said. “It will be monitored by the authorities, the Danish authorities really, and may have some interest for them”, while Arcus-Gruppen’s small market share in Denmark meant it saw market opportunities here.
Global aquavit potential
Asked whether aquavit had wider potential beyond the Nordic countries, Thurmann-Moe said: “Mainly we have to talk of Northern Europe – if you draw a line through Northern Germany then above this – that is where aquavit is principally appreciated as an aperitif.
“We do sell a little bit of aquavit to the US and to Asia, through export sales, but really not very much.”
Arcus-Gruppen described 2011 as a “year of consolidation” in its annual report, but welcomed a December announcement from Sweden that it would end what the firm called “discriminatory” rules that didn’t base listing decision for strong brands such as Linie in the country on sales figures.
A new selection structure introduced by Sweden’s state alcohol monopoly Systembolaget from 2013 would boost its brands, Arcus-Gruppen predicted.
“Popular Norwegian brands such as Linie, Gammel Opland, Vikingfjord and Braastad have suffered from much poorer distribution,” Actus-Gruppen said.
“In the new system, what is known as the ‘Norway rule’ has been removed and sales from all retail outlets will be included when the product listing is decided.”
Pernod Ricard was unavailable to comment on the deal as we went to press.