Pernod Ricard targets Africa

02 July 2012

JOHANNESBURG: Pernod Ricard, the spirits group, is increasing its focus on Africa, an area seen by the company as an "untouched continent" offering considerable growth potential.

The firm plans to open four distribution units in the region in 2012. The first, based in Kenya, was unveiled on June 1, with with the firm also set to begin trading in Angola and Morocco later this year.

"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," Laurent Lacassagne, chairman and CEO of Pernod Ricard Europe, told Beverage Daily.

Currently, Africa provides 5% of divisional profits for Pernod Ricard. However, according to Lacassagne, this geography is still essentially "an untouched continent where things are very open today".

More specifically, Pernod's net sales on the continent rose by 13.7% in the nine months to March 2012, with significant room for additional bottom line growth, even if topline figures remain more limited.

"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," said Lacassagne.

"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."

Among the core priorities for the French corporation will be rolling out "standard" spirits at affordable prices, alongside targeting young consumers. Premium lines, however, also hold some promise.

“We want to activate our strategic premium brands to increase their awareness and take advantage of the growth in that segment," said Lacassagne.

"The second objective – this is where we can take some volumes from beer – is taking advantage of growth in standard, branded spirits.

"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."

Pernod Ricard may also target the beer sector going forward. "We are looking at possible partnerships with beer companies. Today, for example, in Nigeria ... we have a discussion involving beer companies," said Lacassagne.

Data sourced from Beverage Daily; additional content by Warc staff