Pernod Ricard, Inc.
Man of the Year Award
It all started with pastis, the anise liqueur designed for sipping and sitting for hours on end in a café in the south of France. Starting with a small, French pastis company, Patrick Ricard, Wine Enthusiast’s Man of the Year for 2005, has, in just 20 years, forged a multibillion-dollar wine-and-spirits company that spans the globe and owns some of its most prestigious brands. And in the process, he has demonstrated how a family-controlled company imbued with old-style Gallic charm can be just as aggressive as any other modern multinational.
All this would have been enough to make people sit up and recognize Ricard, chairman and chief executive of Pernod Ricard, as a formidable competitor. But in 2005, something happened, something so big that it took the wine and spirit world by surprise: Pernod Ricard joined forces with U.S.-based Fortune Brands to buy Allied Domecq, the number-two wine and spirits company in the world.
It was a move that was audacious and unexpected. In a moment, Pernod Ricard’s annual sales went from $4.2 billion to $6.7 billion. And it has left Patrick Ricard and his family very successful indeed. The company is listed on the Paris-based Euronext exchange, and the Ricard family’s shareholding in the enlarged Pernod Ricard is estimated to be over $1.5 billion.
How did Ricard and his team do it? Careful planning is the answer. Over 100 people worked on the $14 billion joint bid for Allied (at a time when Pernod Ricard’s own capitalization was smaller, at $9 billion). The planning started soon after Pernod Ricard’s previous coup: the purchase, in 2001, of a good chunk of the Seagram wine and spirits empire (which Pernod Ricard shared with Diageo, leaving Allied Domecq out in the cold).
It was obvious from the Seagram purchase that Pernod Ricard had worked out how to assimilate other companies and other brands with relative ease. By the time they issued the Allied Domecq offer, Pernod Ricard had paid down 60 percent of the debt and had integrated famous brands such as Chivas Regal, The Glenlivet and Martell Cognac.
Autonomy is Key
The success of both acquisitions can be credited to careful planning, yes, and to Patrick Ricard’s unique way of running a multinational company: leaving local managers as much autonomy as possible. Here is a company that has plenty of confidence in its managers, says a French consultant who knows it well. It is run in a very decentralized way, allowing people to make mistakes, to take risks. That’s rare. According to Ricard himself, this management style owes to the fact that Pernod Ricard is still a family company: In a family, there is trust and respect.
How did the scion of a pastis company, born in the port city of Marseilles 60 years ago, come to head up a global corporation? Chance is the answer, because Patrick Ricard was not groomed to follow his father, Paul, as head of the family business. That was to be the job of his elder brother, Bertrand. But disagreements within the family led the patriarch to sidestep Bertrand and focus on Patrick instead.
In 1978, Patrick, age 33, took over the helm at Pernod Ricard, a company formed four years earlier from the amalgamation of the two leading French pastis producers, Pernod and Ricard. Since that time, the company has doubled in size every seven years, thanks to a process of acquiring and creating brands around the world. First it was small local brands sold only in targeted markets. Later it was giant global brands that are recognized everywhere.
With the purchase of the former Seagram brands completed, Pernod Ricard was ready to attack an even larger chunk of the American market. That was essential with the decline in sales of spirits in the French domestic market; Ricard was adamant that the American market was the one to conquer. Conquer it he did, and as a result of all its acquisitions, Pernod Ricard today is the parent company of such famed brands as Ballantine’s, Chivas Regal, Kahlúa, Malibu, Beefeater, Havana Club, Jameson, Martell, The Glenlivet, Jacob’s Creek, Mumm and Perrier-Jouët. Now Pernod Ricard has a growing 5 percent of the U.S. spirits market, principally through its Scotch whisky brand, Chivas Regal, but also with more regional brands such as Wild Turkey Bourbon. Ricard believes that greater markets are developed at the local level. It comes down to understanding local tastes, he says.
Businessman, Family Man
But, like so many successful businessmen in France, Ricard remains a family man. Married, with three children, he takes his traditional three-week holiday each year (although he admits to taking a cell phone with him), and attends the annual reunion at the family home on an island between Marseilles and Toulon in the south of France. A man not given to many words, he likes rum and cigars, is a gourmet and a keen hunter.
He is a member of the Club des Cents, a gastronomic club, a devotee of opera, and a collector and patron of art. Recently, he has been involved in sponsoring the fountains at a new museum in Paris, the Musée du quai Branly, a project inspired by French President Jacques Chirac. He was also involved in the purchase of a sculpture by Julio Gonzalez for $3.6 million for the Musée National d’Art Moderne. In other words, Ricard is a cultured man, one with an ability to balance work and pleasure.
Ricard is still on course to retire in three years. Having achieved his ambition of making Pernod Ricard a global giant, he wants to devote more time to his other pursuits. Patrick Ricard, Wine Enthusiast’s Man of the Year, will leave quite a legacy behind.
See the other Wine Enthusiast Wine Star Award Winners.