Pernod Ricard Competition
Now Viewing Pernod Ricard's competition in: Distillers (primary)
Call Preparation Questions
Customers, Marketing, Pricing, Competition
How does the company choose a wholesaler? - In 32 states, distilleries have regionally exclusive relationships with distributors that sell to privately run stores; the other 18 states control all liquor distribution and sales.
How does the company promote itself through the wholesaler? - Companies employ product representatives to oversee a wholesaler's promotional programs.
Who are the company's international customers? - Distilleries selling internationally can sell directly to retailers or work through a third-party wholesaler.
Other than distributors, who are the company's key customers? - Indirect customers are retailers, restaurants, and bars that carry the distillery's product, as well as consumers of spirits.
How does the company market its products? - Major types of marketing include TV, Internet, radio, and magazine ads, and on-premise promotions that include bartender incentives, free glassware, and themed parties.
How much does the company spend on advertising? - The US liquor industry spends around $500 million annually to advertise spirits.
What else does the company do to gain product recognition? - Liquor companies experiment with a wide range of co-marketing programs, including product placement in movies, sponsoring adult-oriented TV shows, and co-branding with food and drink products.
What are the company's typical product prices? - Typical product prices are around $12 for a 750ml bottle of "premium" (mid-range) whiskey, vodka, or gin.
How are the company's products classified? - The industry classifies brands into four categories: value, premium, high-end, and super-premium, with value brands priced as low as $10 per 1.75 liter. Super-premium brands can cost up to $200 per 750ml.
Competitive Landscape
Demand is driven primarily by trends in alcohol consumption and personal income. The profitability of individual companies depends on efficient operations and strong distribution channels. Large companies have advantages in brand recognition and economies of scale. Small operations can compete effectively by specializing in high-end or unusual spirits. The industry is capital-intensive: Average annual revenue per employee is about $1 million.
Business Challenges
CRITICAL ISSUES
Dependence on Consumer Tastes - US liquor companies compete directly with wine, beer, and international spirits manufacturers. Consumer alcohol preferences can shift quickly based on news articles, entertainment and celebrity trends, and health concerns. Spirits and wine have gained over beer in recent years, but beer sales still account for 50 percent of the total market. Liquor's market share, currently one-third of the total US alcohol market, is below its historical peak of 40 percent in the early 1970s.
Compliance with Government Regulations - The liquor industry is one of the most regulated industries in the US. Distilleries must abide by the three-tier distribution system, which puts the success of their product largely in the hands of a wholesaler that is likely carrying and representing competing products. Some states maintain a monopoly on distributing and retailing distilled spirits, yet all 18 of these states permit wine and beer to be sold by private retail outlets for off-premises consumption. The Alcohol and Tobacco Tax and Trade Bureau (TTB) regulates the production, marketing, and transport of distilled products.
Industries Where Pernod Ricard Competes
- Beverages
- Alcoholic Beverages
- Distillers(primary)
- Winemakers
- Alcoholic Beverages
