Supplier Landscape Shifts Ahead?

Look for Diageo and Pernod Ricard to duke it out for global spirits and wine supremacy in 2012. In the wake of Diageo's U.S. investor conference in New York and Pernod's annual meeting in Paris, analysts were rubbing their proverbial hands together in anticipation of the two companies riding the improved trends in alcohol and going head to head. Management at Diageo, the largest of the world's alcohol producers and market with a fairly solid lead, offered ongoing top-line growth as its projection. Also cited was U.S. growth in excess of 3% for fiscal year 2010-11, thanks to market-share dominance and a strong sales force within its exclusive distributor houses, not to mention the hipper edge now evident in marketing for flagship brands Smirnoff and Captain Morgan. For its part, Pernod, now No. 3 globally, enjoys sharpened focus on its Top 14 brands, which includes ABSOLUT and Malibu, and growth in emerging markets, such as Asia and its wine portfolio.

Meanwhile, Beam's spin-off from Fortune Brands, completed in October, places it as the fourth-largest spirits company worldwide. With the recent acquisition of the Skinnygirl brand and the strength of its whiskey portfolio — coupled with its newfound freedom from the Fortune conglomerate and management's new ability to focus solely on the drinks portfolio — Beam is well-positioned to cash in on key market trends. It's also now ripe for takeover by one of the larger companies. While Pernod leadership ruled out “strategic” acquisitions during its meeting, “tactical” ones remain possible; no word from Diageo on any additional acquisition plans.


For chain, multi-concept, hotel, resort and cruise operators, these developments yield unique opportunities. Savvy beverage operators should capitalize on these companies' willingness to partner on aggressive programs that will build brand and portfolio visibility, sales and market share. With on-premise sales trending more positively, look for more attention from suppliers. Commitment to the on-premise sector varied by company during the recession — as consumers shifted to more at-home enjoyment of adult beverages, several of the major suppliers shifted trade marketing dollars to the retail segment — but now the pendulum should swing again. The timing couldn't be better for chain operators. Strong beverage programs and promotion enable the differentiation so needed to drive guest counts and check averages, all of which could lead to a very happy New Year, indeed.


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