Pernod Ricard grabs African growth passport with new regional subsidiaries
Laurent Lacassagne, chairman and CEO, Pernod Ricard Europe revealed the news during an analyst presentation this week, where he noted that Africa now accounts for 5% of divisional profits, but described it as “an untouched continent where things are very open today”.
“This year we plan to open four distribution companies. In Kenya (opened on June 1), Angola in early September and Morocco,” Lacassagne said.
“In H2 2012 we plan to take more direct control of our operation in Nigeria, probably the most promising market in the region, although it is a very difficult market to penetrate," he added.
Huge growth potential
Given PR’s prediction that Eastern Europe could overtake Western Europe in profit terms within five years, Nomura analyst Ian Shackleton asked how quickly the African business – 10% market share, 17% globally for PR, net sales up 13.7% in the nine months to March 2012, could grow?
Lacassagne said: “We are an early stage of development where we see huge potential, but probably in the medium to long-term. It’s time to be directly present in Africa to activate our key strategic brands, and next year we plan to invest in brand growth in these markets.
“In five years time, in terms of profit, I’m not sure things will change a lot. But we want to significantly improve the presence of our brands and their awareness, image and equity among consumers.”
PR sees a real opportunity in the ‘standard’ spirits segment among emerging and young consumers, and believes successful South African growth in premium spirits can be replicated across the region.
“We want to activate our strategic premium brands to increase their awareness and take advantage of the growth in that segment. The second objective – this is where we can take some volumes from beer – is taking advantage of growth in standard, branded spirits,” Lacassagne said.
“African consumers are generally very attracted by brands, so we want to offer them these, maybe at the premium end first but also in the standard segment first, because it could take them a little time to move from standard to premium.”
Discussions with beer companies
Speaking of the new affiliate companies, Angola presented the “greatest challenge”, Lacassagne said, but PR was already leader with volumes of 200,000 cases per year, a significant business built-up by its distributor, with ‘Passport’ the main brand, playing in the ‘standard plus’ category.
Here PR would take control of market strategy and strategic sales – premium on trade, modern retail – Lacassagne said, working with a distributor in charge off the traditional off-trade; it would adopt the same approach in Morocco and Kenya, he explained.
Shackelton asked Lacassagne to what extent PR could get involved with beer industry players in these markets, either at the wholesale level or by tying-up with a beer producer?
“We are looking at possible partnerships with beer companies. Today, for example, in Nigeria, where we plan to set up our own organisation in H2 2012, we have a discussion involving beer companies.”