Pernod Ricard reconnects brand and local teams to win customers ‘in the last 3 feet’
After ten years of aggressive acquisitions, Pernod Ricard’s bloated size weighed on revenue growth in 2013. Armed with a three-pronged approach aimed at “simplifying, prioritising and mutualising” operations, the business is reconnecting its brand and market marketing teams to win customers “in the last three feet” of the sale.
The change serves as the cornerstone of the company’s “Project Allegro” plan to improve business efficiencies and save €150m (£118m) over the next three years. Pernod Ricard’s marketing unit has borne the brunt of the changes, resulting in its brand marketing teams being split into two departments.
A “Brand Design” unit will focus on defining the strategy for brands including price positioning and media plans. The “Brand Delivery” hub assumes responsibility for developing marketing solutions and activation plans for Pernod Ricard’s market companies. The regional teams will focus on “best-in class executions, says the business, in a bid to fine tune the balance between localised campaigns and global strategies.
It has rendered the company’s brand development hub obsolete, with some of its marketers set to join the revamped local teams and others to be made redundant. The company declined to say how many marketing jobs are at risk but said there would be “some shortfall”. The cuts are part of a wider cull of around 5 per cent of its workforce, which represents around 900 jobs, to help make its cost structure leaner.
A spokesman for the business said: “We had reached a certain point of complexity and needed to be more agile. By making our brand and market teams work closer together it’s about having more clearly defined roles. When it comes to [the local] market teams, the key challenge is to focus on execution and not about redefining the strategy for the brands.”
Pernod Ricard is pooling its 42 markets Europe into 10 management divisions to support the shift. Regional hubs will also launch in Asia, Singapore and Hong Kong alongside a single division for Australia, New Zealand and travel retail Pacific.
Meanwhile, a new division will unify marketing and sales at group level to foster what Pernod Ricard says is a “holistic approach of the consumer decision”. The revamped team will be responsible for refocusing the company around luxury, digital acceleration, on and off-trade development, innovation and shopper experiences.
Marketing vice president Conor McQuaid will lead the division once it officially launches next January. His appointment to the newly created role signals the end of the chief marketing officer and managing director of brands positions at Pernod Ricard with Martin Riley and Thierry Billot respectively leaving the business.
Deputy chief executive Alexandre Ricard will assume Billot’s corporate-wide responsibilities for brands and work closely with McQuaid moving forward.
Pierre Pringuet, chief executive of Pernod Ricard, told analysts on a conference call yesterday (28 August) that the unified marketing and sales house had the “simple goal” of encouraging a “holistic approach of the consumer decision”.
“I mean the famous last three feet. [Which] is basically when the consumer makes the decision whether it be in a supermarket or in the bar, to decide which brand he would consume”, adds Pringuet. “I would like to insist that Allegro is first and foremost an operational efficiency project. Of course it will generate savings, but the main goal is improving our efficiency. And with one key goal, it is maximising our ability to capture future growth.”
Despite the changes, Pernod Ricard insists its culture of decentralised brand management is not at risk. Brands will still be run as separate P&Ls but will be able to exchange ideas and resources more effectively, the company said.
Two digital tools are being built to accelerate the exchange of ideas. A “MyBrands” iPad app gives everyone within the group access to brand strategy, media campaigns, and activation details in different markets. The information is also concentrated into a “MyPortalTouch” intranet system.
Pernod Ricard expects the structural overhaul to free up additional funds to fuel growth as sales in its last financial year slumped 7 per cent to €7.9bn (£6.3bn). Pringuet said the company hopes to re-invest “at least one third”, or €50m (£39m), of the €150m over the next two years.
“The benefit of [the restructure] is that it’s a quick decision-making process, as close as possible to the brand or to the consumers”, adds Pringuet. “But it doesn’t mean that everyone has to do everything. No, it’s all about expertise sharing, mutualisation of resources.