Growth for International Spirits Companies in Difficult Times

Introduction

Scope

Key findings

Global Overview

Consolidation continues in global spirits

The greater financial strength of international companies

Big two international companies stretch away

Growth Fundamentals

Broad geographic and category spread key to growth

Geographic diversity vital for growth

Growth fundamentals: Emerging market presence

Rapidly growing emerging markets

Case study: Local brands boost Pernod Ricard’s premium portfolio

Case study: Diageo’s local joint-venture in Russia

Case study: Setting up own distribution – Brown-Forman in Poland

Growth fundamentals: Room for growth in mature markets

Mature vs emerging market focus not the key

Mature market growth potential

Stagnant mature categories offer growth opportunities too

Case study: William Grant growth in the US

Case study: Third-party distributor – Jägermeister in the UK

Growth fundamentals: Geographic and category diversity

Narrow brand and geographic focus hurts Bacardi

Bacardi rum a paradigm of too much focus on core markets

Breadth allows Pernod Ricard to refocus Martell on growth markets

Narrow focus hits margins: Courvoisier

Narrow geographic focus helps and then hinders Captain Morgan

The danger of over-reliance on key markets

Geographic diversity drives growth and limits declines

Growth Through Acquisition

Mergers and acquisitions drive global consolidation

M&A activity transforms Pernod Ricard

Diageo goes deeper into Brazil

Weak portfolio combined with public listing leaves Beam vulnerable

Pernod Ricard in prime position to benefit from Beam weakness

Pinnacle acquisition barely addresses Beam’s weaknesses

José Cuervo the tequila of choice for Diageo

Maker's Mark the best option for Diageo among Beam’s bourbons

Pernod Ricard the most likely to benefit from any Beam break-up

Key brands and their potential acquirers

UB Group’s troubles offer Diageo a way back into India

Diageo strengthens its global position

Recommendations

Big two still have work to do

Second tier companies have plenty of room for growth

Small to mid-sized companies

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