Table of Contents

liquor and alcohol industry

  The drinks industry report from the Economist April 2008

Pernod: 

The group already owns big brands in whisky (Ballantine's and Chivas Regal), champagne (Mumm and Perrier-Jouët), cognac (Martell), rum (Havana Club), wine (Jacob's Creek) and gin (Beefeater). Diageo, its big rival, controls 20% of the American vodka market with Smirnoff vodka. Mr Ricard has been trying for years to take over Russia's Stolichnaya vodka, which his firm distributes outside Russia. This agreement will now come to an end.  Pernod Ricard has come a long way from its origins as Ricard, a maker of pastis, an aniseed drink, founded in 1932 near Marseille. After buying Allied Domecq, Pernod Ricard said it thought it could become the world's biggest drinks group over the next decade—though without any further big acquisitions. This week's deal means that if all goes well, the vodka-fuelled French group may accomplish that feat rather sooner than expected.

Pernod Ricard buys V&S:  Vin & Sprit (V&S), which was put up for sale by the Swedish government in December and owns Absolut, a premium-vodka brand. And he won. On March 31st, Pernod Ricard announced its takeover of V&S for €5.6 billion ($8.9 billion) including debt.   Pernod won because it made the best offer. It promised to keep production in Sweden and to give local management lots of autonomy, as it has always done with its brands. Yet the price is high: 21 times V&S's earnings before interest, tax, depreciation and amortisation last year. And Pernod is taking on lots of debt.

Absolut: 

Clever marketing campaigns have propelled it from its Swedish home to leadership of the world's premium-vodka market—a fast-growing segment, especially in America, the world's biggest market for spirits.

Bacardi

A family-controlled drinks company...Bacardi wanted V&S to bolster its position against unwanted takeover offers. 

Diageo: 

http://www.diageo.com

Formed by the 1997 merger of alcoholic beverage giant Guinness with food and spirits company Grand Metropolitan, Diageo is the world's largest producer and distributor of alcoholic drinks. Its beers and distilled spirits include Guinness Stout, Harp Lager, Johnnie Walker Scotch, José Cuervo tequila, Tanqueray gin, and Smirnoff vodka.  The company gained the Captain Morgan, Crown Royal, and VO Canadian brands through its purchase of Seagram's drinks business from Vivendi (formerly Vivendi Universal).  In 2008 the company abandoned its plans to bid on Absolut vodka maker, the  V&S Group (which is being auctioned off by its owner, the Swedish government), and instead formed a 50-50 joint venture Absolut rival, Dutch vodka maker, Ketel One. Diageo paid €610 million ($900 million) for its interest in Ketel, which adds the premium vodka brand to its product lineup.  Diageo owns 34% of Moët Hennessy, the spirits and wine subsidiary of LVMH. It also has a joint venture for the production and distribution of Smirnov brand vodka in Russia. Venturing farther afield, in 2007 the company acquired a 43% interest in Quanxing, which distills the traditional premium Chinese liquor, baijiu.  Although it has operations worldwide, Diageo's principal production facilities, which account for some 75% of the company's output, are located in the UK, Ireland, Italy, Canada, and the US. It owns wineries in France, Argentina, and the US.  Also in 2002 Diageo sold Burger King for $1.5 billion to a group composed of Texas Pacific Group, Bain Capital, and Goldman Sachs Capital Partners. Diageo's decision to sell its Pillsbury unit and its Burger King business (the #2 burger chain, after McDonald's) was part of the company's new focus on its spirits, wine, and beer businesses. The Pillsbury divestiture gave the company a 33% stake in General Mills (Diageo sold nearly half of its shares in October 2004). Also in 2002, Diageo and Pernod Ricard, which together own rights to the Seagram's brand, sold Seagram's line of nonalcoholic mixers to The Coca-Cola Company.  In 2003 Diageo and Jose Cuervo said they would jointly sell Don Julio and Tres Magueyes tequilas. Diageo also joined with Heineken to purchase 30% of InBev's Nambia Breweries in southern Africa. The brewery will make Heineken and Beck's beer.  In 2005 Diageo and Heineken formed a partnership for the production and distribution of Guinness in Russia. The company also acquired The Chalone Wine Group in 2005 for about $260 million. It added the winery into Diageo's current US wine operations, which are organized under Diageo Chateau & Estate Wines. It also acquired Netherlands distiller Ursus Vodka for an undisclosed amount and added Bushmills Irish whiskey to its stable, with the purchase of the brand from Pernod Ricard for $363 million. It also agreed to stay out of any negotiations regarding the takeover of Allied Domecq. (In 2005 Pernod Ricard acquired Allied Domecq.) That year it also disposed of its 4% holdings in General Mills, saying the investment was not congruent with its business strategy.

Sources:

    the economist.com

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