Pernod Ricard says investment in effectiveness is driving more ‘precise’ marketing

The drinks giant is using technology to optimise how its marketing and promotional spend is deployed as it looks to get higher returns on its consistent level of investment.

Pernod Ricard says it is using data with “more precision” and is better at optimising marketing spend thanks to the introduction of data analytics tools that monitor investment.

The drinks manufacturer, which owns brands such as Jameson, Malibu and Absolut, has been investing in technology and data capabilities to optimise the efficiency of its marketing and promotional investment.

These tools include Maestria, which helps the business form a portfolio strategy by mapping consumption moments through consumer data, and Vista Rev-Up, which helps the company map its promotional opportunities and increase return on investment. It is also making its marketing spend go further through the Matrix tool, which aims to optimise investment across touchpoints and brands.

“We will be a lot more precise in terms of our strategic planning and execution on the brands we activate everywhere in the world,” CEO Alexandre Ricard told investors on a call today (31 August).

The company’s drinks rival Diageo has been vocal about the benefits its investment in proprietary effectiveness tools such Catalyst have delivered to the business over the years.

Pernod Ricard’s own digital transformation has been ongoing since 2020, and has seen it step up its technology and data proficiency. Ricard said the company has an “endless” commitment to improving its data capabilities to enrich how it reaches consumers and maximise investment.

The company’s advertising and promotional spend for its 2023 financial year, which ended in June, was at “record” levels in absolute terms at €1.94bn (£1.66bn) versus €1.70bn (£1.46bn) in the previous year. However, this investment represents a consistent level with last year as a ratio of sales. Advertising and promotional spend represented 16% of sales in the company’s 2023 year, compared with 15.9% in 2022.

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This is consistent with what the company forecasted back in February, when Ricard told investors he expected marketing spend as a percentage of sales to remain consistent but said that the ROI in this investment would be “far greater”. He made this prediction due to the work the company has done in its digital transformation efforts.

The investments behind data and technology detailed today form part of wider organisational changes the company is making, in a scheme Ricard dubbed ‘Project Tomorrow’. The business has reorganised its leadership structure to enable better reactivity to dynamic market conditions.

We will be a lot more precise in terms of our strategic planning and execution on the brands we activate everywhere in the world.

Alexandre Ricard, Pernod Ricard

Ricard said there were three “philosophies” underpinning the changes: the simplification of processes, discipline in the company’s execution, and “empowering” its teams to be autonomous while also being connected to the company, something which the CEO labelled “freedom in a framework”.

The company said the reorganisation would take it to the next stage of its growth journey. Ricard hailed the success of its strategy thus far after what he termed a “very strong” financial year.

Pernod Ricard saw 10% net sales growth in its 2023 full year, reaching €12.14bn (£10.41bn). Around 8% of this growth was driven by price increases, while around 1% was driven by a more profitable product mix. The company did manage to modestly grow volumes by 1% in the year, despite the impact of inflation.

In the UK specifically, the company saw sales growth of 2%. It noted particularly strong performances from Jameson, Kahlua, Absolut and Malibu, which all saw double-digit sales growth. It did not detail how volumes were affected in the UK, which has generally been a market where consumer sentiment has been particularly affected by inflation.