February 19, 2015
Pernod Ricard is looking "very closely" at acquiring a craft spirits brand, although CEO Alexandre Ricard has warned that industry leaders must decide what the term means.
While brandished by spirits brands large and small of all categories for several months, the word 'craft' has created mass confusion across the industry as to its definition.
Despite using the term to describe several products in the Pernod Ricard portfolio, including The Glenlivet, which has an annual output of 10.5m LPA, and Martell, which celebrates its 300th anniversary this year, Ricard told journalists in London yesterday that despite being intrigued by the sector, even he is confused by the term.
"I'm struggling with the definition of craft spirits and at the end of the day the real definition. is the one the consumer has in his mind," he said. "What is craft? Does it have to mean small? Does it have to mean a pot still in a garage? Does it mean from a close community, or is craft what we see when we visit Pernod Ricard's distilleries?
"Yes we are monitoring craft as well, very closely, and the underlying question is, is there a fragmentation of the market in the US and as industry leaders it is our duty and our responsibility that we engage with consumers and explain what real craft is."
Ricard, who took over the position of CEO of the French drinks group last week, added that as well as looking into defining the term, Pernod is observing the long-term profitability of craft spirits with an eye to make an acquisition.
"We look at [startups] obviously, and the question is can they be scaled up or will they be limited to an amount of volume?" he said.
"We are looking very closely to really enter craft under your definition of the market in the US [as defined by the American Distillers Association]. But we need to have a long term view; is there a real distillery which is craft, what is the scaleability thereof, and what is the story behind it?"
His sentiments mirror those of his predecessor Pierre Pringuet, who in February 2013 warned journalists to "not be surprised to see new initiatives" from the group in craft spirits.
The group subseqently went on to launch "craft" Canadian whisky brand Pike Creek the following month.
Source: The Spirits Business
by Becky Paskin
17th February, 2015