Tuesday, September 27, 2011

The Global Spirits Industry’s Top Players: Taking Stock After Years Of Consolidation

(by Shanken News Daily) Analyzing the effect of consolidation after a decade and a half of deal-making, Shanken News Daily sister publication Impact has ranked the world’s top spirits companies—and compared today’s numbers with those in 1995.

The biggest mover in the consolidation game has been Pernod Ricard, which was in the top 10 in 1995 but with a low profile. Much of Pernod’s 24-million-case business (compared to 97 million cases today) was in France, where its Ricard and Pastis 51 brands dominated. Back then, the world’s top two spirits companies were IDV (GrandMet) and United Distillers (Guinness), followed by Seagram and Allied Domecq, which was born in 1994 after the merger between Allied Lyons and Pedro Domecq.

Guinness and GrandMet merged in 1997 to form Diageo, creating a spirits portfolio of unparalleled power, led by Smirnoff, Johnnie Walker, and Baileys. While the Diageo deal reshaped the global spirits landscape, it foreshadowed three mega-deals that would transform the business even further. Pernod Ricard was involved in all of them. In 2001, Diageo and Pernod Ricard acquired Seagram’s spirits and wine business, several months after Seagram announced it would exit the business to focus on entertainment. The Seagram deal fortified Diageo’s already-formidable lineup, adding powerhouses like Captain Morgan and Crown Royal. But it remade Pernod Ricard, energizing its portfolio with big-name brands like Chivas Regal and Martell. Four years later Allied Domecq went on the block, and Pernod was there again, collaborating with Fortune Brands, whose Jim Beam Brands unit was aiming to diversify. That deal added Ballantine’s, Beefeater, Malibu and KahlĂșa to the Pernod portfolio, while Beam got Sauza, Courvoisier, Canadian Club and Maker’s Mark, among others. In 2008, one of the industry’s crown jewels—Absolut vodka—was put on the block. Seeing Absolut as the missing piece in the portfolio, Pernod again paid up—this time without a partner, acquiring V&S for approximately $9 billion.

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