The beverage giant uses technology to optimize marketing and advertising costs to generate a significant return on the same investment.
Pernod Ricard said it was launching a data analytics tool that tracks spending, "more accurately" and better marketing.
The beverage maker, owner of brands such as Jameson, Malibu and Absolut, has invested heavily in technology and data capabilities to increase the effectiveness of marketing and advertising investments.
These tools help companies shape their portfolio strategy by mapping consumption data, while Maestria and Vista Rev-Up help companies maximize advertising opportunities and increase return on investment. The company is also increasing its marketing spend with matrix tools to optimize spend across touchpoints and brands.
“We will be more precise in the strategic planning and execution of the brands we are reviving globally,” CEO Alexandre Ricard told investors today (31 Aug).
Beverage rival Diageo has been open about the benefits of investing in a proprietary performance-enhancing tool like Catalyst for years.
Pernod Ricard's own digital transformation has been underway since 2020 and the company has expanded its technology and know-how. Rickard said the company is "constantly" looking to improve its data capabilities to increase its reach to consumers and increase investment.
Corporate advertising and promotion spending for the 2023 fiscal year, which ends in June, is at an absolute “record level”: €1.94 billion (£1.66 billion), compared with €1.7 billion (£1.46 billion). ) last year. year. However, when viewed from the percentage of sales, this investment shows a stable level compared to last year. Spending on advertising and promotion will account for 16% of the company's sales in 2023, compared to 15.9% in 2022.
The UK's leading marketer, Pernod Ricard, talks about increasing his share of marketing volumes
This is consistent with the company's guidance in February, when Rickard told investors they expect marketing expenses as a percentage of sales to remain the same, but the ROI on the investment will be "much higher". He predicts this given the efforts the company has put in as part of its digital transformation efforts.
The information and technology investment announced today is part of a broader organizational transformation the company is undertaking as part of what Rickard calls the "Project Tomorrow". The company has adapted its management structure to better respond to changing market conditions.
We will be more precise in the strategic planning and execution of the brands we revitalize globally.
Alexandre Ricard, Pernod Ricard
Rickard's three "philosophies" for changing processes were aligning, disciplining the company, and "letting" the team be autonomous in running the company, which the CEO called "internal independence."
The company says the reorganization will move it into the next phase of growth. Ricard credited the strategy's success after calling it a "really powerful" exercise.
For the full year 2023, Pernod Ricard's net sales rose 10 per cent to €12.14 billion (£10.41 billion). About 8% of the growth was due to higher prices and about 1% due to a more profitable product mix. Despite being hit by inflation, the company was able to increase its volume by a little over 1% in a year.
In the United Kingdom, in particular, the company was able to record a 2% increase in sales. This highlights the strong performance of Jameson, Kahlua, Absolut and Malibu which posted double digit sales growth. It's not clear how this affects interest rates in a market where British consumer confidence has been hit hard by inflation.
