Pernod Ricard: Brexit won't hit ad spend, but no-deal could be ‘short-term nightmare’
Pernod Ricard has admitted that a no-deal Brexit scenario would be “a short-term nightmare”. However, it’s insistent that whatever form the UK’s departure from the EU takes, it won’t have any long-term impact on its marketing plans.
Pernod Ricard has admitted that no-deal Brexit scenario would be 'a short-term nightmare' / Pernod Ricard
Along with L’Oréal, Pernod Ricard has been among the businesses shipping extra stock between Britain and continental Europe as part of its no-deal contingency plan.
Jean-Christophe Coutures, chairman and chief executive at Chivas Brothers conceded during a press briefing on Tuesday (12 February) that exiting the EU without a deal in place would be the “worst thing that could happen” but maintained that Pernod Ricard was in “a good position to deal with the short-term nightmare it could generate” – such as border delays for imports and exports.
Despite suggestions that the UK ad market will be plunged into its first recession in a decade in the event of a no-deal Brexit, UK managing director David Haworth said that Pernod Ricard’s plan to grow its market share in Britain was unlikely to be impacted by whatever solution Theresa May offers up before the 29 March deadline.
Haworth stressed to The Drum that Pernod Ricard's marketing budgets post-Brexit wouldn't be hit, saying the freshly-announced three-year plan (which aims to accelerate sales growth globally by up to 7% by 2021 with the UK as a "strategic market") was based around the hope “common sense” would prevail and some kind of deal would be put in place.
“We're continuing to work as normal. We’re not reducing our advertising and promotion investment,” he added.
“If anything, we’re looking to increase our market share over the next few years. In the UK we’re a challenger, we think we can grow the portfolio we have and continue to invest. So whatever short-term hiccups there are with Brexit, I honestly don’t expect it to impact on our long-term strategic decision-making."
The scale of Pernod Ricard's Scotch and gin businesses in the UK means the company exports more from the isles than it imports. With warnings of a post-Brexit financial downturn looming large chief executive Alexandre Ricard said that even if the pound were to weaken, that "from a purely selfish point of view", it would be good for his business.
"No matter what happens with Brexit, the UK will remain the UK, consumers will remain consumers and our ambition to grow our share here will remain unchanged," he asserted.
"The UK is the eighth largest economy in the world, it’s a strategic market for Pernod Ricard."
Having put European and Latin America chief exec and former finance head Christian Porta in charge of brand strategy last year, the company said the moroe holistic approach to marketing was paying off.
"The proof is in the numbers," said boss Ricard – pointing to a strong first half of the year which included 12.8% growth in global organic profits for the six months to December 2018 to €1.7bn.