Pernod Ricard CFO Hélène de Tissot

Olly Wehring:

I started my career as a tax lawyer and joined the group as tax director in 2002. I've spent all of my 17 years with Pernod Ricard in the finance function. After eight years as tax director, I moved to Asia as CFO for the region, based in Hong Kong, for six years.

In 2016, I came back to Paris to take charge of strategic M&A, reporting into then-CFO Gilles Bogaert. I was at HQ at the time of our mega deals - The integration of Seagram, Allied Domecq and Absolut. Then, 14 months ago, I became CFO.

The energy was great at the time, but I find the same level of energy with smaller deals. We get to meet the founders, the negotiations with the sellers are much more direct - we don't go through bankers, we meet the people, so we get to understand what they've been trying to build. 

It's a really positive environment to talk about the culture and values of Pernod Ricard and how we want to grow their brands. So, it's less financially-driven than the mega-deals, but I find it very positive and enjoyable as well.

It's been great to contribute to the success of those acquisitions and to see how powerful and ambitious the group is, thanks to the deals we've made in recent years.

It's difficult to summarise everything. While we're looking at spirits and wine products, we're also looking at services such as the e-commerce platform.

If we focus on spirits, what we're looking for are brands that can bring new growth opportunities to the group, because of their categories, geographies or moment of consumption. They need to be relevant, compared to where we are today with the rest of our brands. Usually, we look at brands that are already at a critical size, so the proof of concept is already behind them. That means we can leverage their potential with the right investment from Pernod Ricard and use the strength of our route-to-market.

Of course, the answer is different depending on the target. Sometimes, the brand is big enough to be immediately integrated into the group's platform. For example, Malfy gin (acquired in June 2019) has joined 'The Gin Hub'.

The criteria include the dynamism of the target brand, the strength of the equity, the quality of the product, its pricing strategy, the consumer opportunity and what we can bring in terms of acceleration and value creation.

We don't have specific guidelines for a volumes number. There's nothing prescriptive for us in terms of size.

What we want is to bring the right ecosystem that would be relevant to any entrepreneurs who would like to partner with us or sell their brand to us. It's not only about the amount on the cheque that we give them.

I would be a bit arrogant if I said yes! I didn't see it coming before anybody else. What the situation showed, however, was our resilience - this was a significant change in one of our key growth markets. What's more important is what we have done since then to diversify our growth. We want our growth to be broad-based, so we've been doing things quite differently in China since those days.

Today, we're enjoying very strong growth with brands such as Absolut, Ballantine's, Jameson and Jacob's Creek. Having said that, Martell is still growing significantly. It's difficult to say we're not relying on Martell for our performance in China, but we've also been diversifying our growth within Martell, in terms of channels and of quality. We've also been working on recruiting new consumers and premiumising them.

Another learning is that we want to globalise Martell. Our aim of high single-digit growth for Martell in the mid-term, it's globally, it's not only for China. We've been quite successful in developing Martell strongly in the US - we're still small there but we're making progress.

I think the situation is very different now. The approach to entertainment was very different then to what it is now. It's more within private businesses than before. What's of more concern right now is the impact on consumer confidence of the trade war with the US.

We'll be paying lots of attention to this in the coming weeks and months.

In our guidance (for fiscal 2020), we mentioned a particularly uncertain environment - the US tariff situation is part of that environment. The list of products that could be affected has been evolving, but Scotch and Irish whiskey are on the list, as are Cognac, wine and Champagne.

The addition of Scotch and Irish whisk(e)y to the list could have a significant impact on us. We don't yet know if it's going to happen, or when. We're taking the threat very seriously and we're monitoring the situation. It's critical for us to have a free-trade environment.

First, you need to know how much is at stake. Then, we'll work on our pricing strategy, depending on the elasticity of our brands. There could also be such things as early shipments to limit the impact of the timing of implementation.

Hélène de Tissot: I don't think it was a mistake. You need to look at what the options were at the time of making that choice. We were revisiting our portfolio as well as deleveraging.

In the US, we want to deliver more, we want to beat the market, that's our ambition. Having said that, not being in the American whiskey category has been something we wanted to change. That's what we've been doing with these bolt-on acquisitions.