Pernod Ricard has a competitive advantage: the French spirits maker’s new CEO isn’t that much older than a Millennial.
Alexandre Ricard officially took over his family’s business about a month ago, and the 42-year-old is now in charge of running the world’s second largest spirits maker, which produces Absolut vodka, Chivas Regal whisky and Malibu rum. He has spent the months leading up to his succession touting his strategy at Pernod Ricard: a focus on accelerated innovation, not any major strategy shifts.
The world’s largest spirits makers and brewers are facing challenges in Western markets from upstart craft brands that have piqued the curiosity of young Millennial drinkers. The food and beverage industry is noticing that big brands carry less cachet with younger consumers, who are favoring smaller niche brands with unique stories to tell.
“Millennials are a lot more demanding,” Ricard told Fortune. “They are a bit more fickle in their choices.”
Ricard and other food and beverage executives say Millennials are less loyal to major brands than prior generations. Instead, a Millennial will zero in on a particular beverage, such as whiskey, and then try different liquors within that category. In the past, drinkers have been more loyal to, say, a particular drink brand, such as Jack Daniel’s, or Budweiser.
“It’s our job and our strategy to make sure that our brands are part of that repertoire,” Ricard said.
Ricard has laid out a few firm goals for the French company, calling sales growth his “number one” priority and accelerating interest in premium-priced spirits, a pocket that has led much of the recent demand in the U.S. He also sees greater opportunities to sell whiskies and other brown spirits in Africa and more potential acquisitions. Pernod last year bought Kenwood Vineyards from California and acquired a majority stake in tequila maker Avion Spirits, so deals have clearly been on the table.
And while it has a healthy sales growth goal almost any CEO would aspire to produce, Pernod’s has had a ho-hum performance recently.
The company last month reported a slim 1% increase in net sales for the first six months of the current fiscal year. Big spirit makers are facing challenges from upstart craft brands in established markets, a trend that mirrors what’s happened in the beer industry. And while growth prospects look alluring in Africa, where Pernod is reporting double-digit growth, the much-larger China market’s sales slid 16% as a result of an anti-extravagance campaign backed by the government that has hurt the liquor industry.
One challenge in the U.S. that Ricard must address is the vodka market, which is increasingly competitive as new brands make a splash, hurting Pernod Ricard’s Absolut. That vodka’s U.S. sales slid 6% in the second half of last year, according to Nielsen stats, far underperforming Malibu, Jameson whiskey, and Martell cognac.
“Vodka is highly competitive, we are investing behind Absolut,” Ricard said.
The vodka category is the most popular-selling spirit in the U.S., so it’s important to Pernod Ricard. But the company’s CEO doesn’t play favorites when it comes to his brands.
“My dream is to have every single one of our beautiful brands cover every single potential moment or experience of conviviality around the world,” Ricard said. “That’s a beautiful dream.”