Growth Strategies Case Study

Will Pernod Ricard Say Cheers With Champagne?

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Abstract:
The highly fragmented alcoholic beverage industry comprised mainly of three segments: Beer, Spirits and Wine. Amongst the grand array of wines, ‘Champagne’, the most famous sparkling wine was supported by strong international demand and registered a growth rate of 2-3% per year.

The France-based Pernod Ricard S.A. was the second largest player in the overall wine & spirits segment. Though it was a major player in other segments of alcoholic beverages, the company lagged far behind the market leader LVMH in the champagne market. It ranked no.4 in the global champagne market. Following the stagnant domestic market and growing international demand, Pernod Ricard had huge ambitions to make it big in worldwide champagne market. Besides expanding into the growing markets like UK and US, the company aimed to explore the emerging markets like Russia and China. But analysts predicted that Pernod Ricard would have to strive hard to meet its global ambitions in champagne business as the brand portfolio of the company still lacked major champagne brands. Moreover, Pernod Ricard missed an opportunity of acquiring a big champagne house “Taittinger”.

The case traces the journey of Pernod Ricard and highlights the organic and inorganic growth strategies of the company. The case explores the opportunities and challenges in store for the company and aims at ensuing a debate that whether Pernod Ricard will emerge as the prominent player in the global champagne market.

Pedagogical Objectives:

• To highlight the entry strategies for new markets and market regaining strategies in highly fragmented markets
• To discuss the competitive strategies of Pernod Ricard
• To exemplify the inorganic growth strategy in business development.

Keywords : Pernod Ricard; Business Strategy; Strategic Management; Mergers and Acquisitions; Organic Growth; Inorganic Growth; Market Entry Strategies; Market Development Strategies; Competitive Strategies; Globalisation; Market Expansion Strategies; Horizontal Integration; Growth Strategies Case Study; Alcoholic Beverages; Wine and Spirits; Champagne; Sparkling Wine; Allied Domecq; Seagram; Second largest wine and spirits company

Contents : 
Introduction – Alcohol Beverage Industry
Spirits Segment
History of Industry Consolidation
Pernod Ricard SA
The Era of 1990s
The Allied Domecq Acquisition
Functional Strategy
Pernod Ricard in Champagne
Pernod Ricard - Seeking Growth