Pricey Absolut vodka was the big prize when Pernod Ricard SA bought Vin & Sprit AB from the Swedish government last year for $8.9 billion. Alas, as the Wall Street Journal reported on Friday, the eve of a major recession is not the best time to pay top dollar for a top-shelf liquor brand. For the year ended Aug. 22, Absolut retail
sales were down 6% in the U.S., the biggest market for the brand, which was also suffering from the slowdown in the bar and restaurant business.
According to the report, Pernod execs say they remain pleased with the brand and that distribution changes accounted for some of the falloff. That struck a familiar note, since we noted when the deal went down in March of 2008 that Vin & Sprit
was involved in two far-reach distribution joint ventures with Fortune Brands, Inc., makers of Jim Beam and Courvoisier, among other intoxicants. Fortune was a losing bidder in the Vin & Sprit auction, opting out when the price got too high.
Since then Pernod has exited both the Maxxium JV, which covered Europe, Australia, Asia, Mexico and Canada, and the Future Brands JV, which covered the U.S. According to Wine & Spirits Daily, Pernod paid Fortune $230 million to
exit the U.S. venture in August of last year.
Fortune Brands also bought Cruzan Rum from Pernod for $100 million and, the month before, bought back the 10% stake in its Beam business that Vin & Sprits had held, paying $455 million.
Quite a to-do list, wasn't it? With all this, and a deep recession too, Pernod may be feeling glad that that Absolut sales in the U.S. weren't down more. -
Kenneth Klee
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