Christian Barré, chairman & CEO of Pernod Ricard Winemakers Spain, explains how Campo Viejo has become such a success story for the group and outlines his luxury ambitions for the Ysios brand.
Christian Barré, chairman & CEO of Pernod Ricard Winemakers Spain
As the many people who have been seduced by the idea of owning a winery can testify, that romance is quickly punctured by the realities of the bottom line. Impossibly fragmented, vulnerable to the vagaries of farming and often taking several years before it can even reach a market where prices are fiercely competitive, it is no surprise that the giants of the drinks industry tend to focus on spirits or beer.
Just look at Foster’s decision to cast off its wine division in 2011, the same year that Rémy Cointreau sold its Champagne portfolio, freeing up capital to buy itself a nice whisky brand instead. Over at Diageo, investment is being firmly channeled towards the booming Scotch whisky market and the opportunities it sees with Tequila.
So what’s going on a Pernod Ricard? Last financial year its four “Priority Premium” wine brands, which represent 5% of the group’s total business, achieved combined sale growth of 2% – not bad when you consider the slide in Pernod’s overall figures thanks to Chinese-related hit taken by its Cognac and whisky divisions.
Of these wine brands, it is Campo Viejo, a 1.9 million case Rioja brand that controls nearly 10% of the region’s vineyard area, whose performance and activity is particularly eye-catching right now. Pernod Ricard increased its marketing budget by 23% for 2012/13 and was rewarded with 10% volume and value growth. That’s in a Spanish wine market which, according to IWSR figures, saw global volume growth of just 3% in 2012. In the UK, Rioja’s largest export market, Campo Viejo saw value sales leap by 20%. Meanwhile US sales rose by 12% and even the faltering domestic market, Campo Viejo’s largest, grew by 7%.
“It’s growing well everywhere,” sums up Christian Barré, chairman & CEO of Pernod Ricard Winemakers Spain, who attributes this success to a number of different elements. Firstly, he notes, “Campo Viejo is a very easy to understand brand; its hierarchy is very clear.” This simplicity was enhanced in 2012 with the decision to reclassify its crianza level wine as Tempranillo. “Customers were confused by crianza; they thought it was a variety,” explains Barré.
Nor does Pernod allow its wine division to be excused from the relentless level of innovation that is more usually associated with the spirits sector. “Vodka is easy because there are no rules, but that doesn’t prevent us from innovating,” maintains Barré. “Innovation is key at the premium level.” Last year saw Campo Viejo add a Garnacha to its range, which Barré explains as “an innovation that really addresses the consumer need for a round palate.”
What’s more, accelerated by an experimental winery completed in 2013, the next development is already in the pipeline. “We’re working on something new for release in the next year or so,” reveals Barré, although he refuses to be drawn on the precise form this new product will take. Nevertheless, he does acknowledge an obvious gap in Rioja’s current reputation, saying: “We will be doing more in the future with white and rosé.”
Certainly from a viticultural perspective the timing is ripe for such a development. In a bid to strengthen its market share for white wine sales, 2009 saw Rioja’s regulatory board authorise the planting of 1,725 hectares of six white grape varieties. These included the newly permitted Sauvignon Blanc, Chardonnay and Verdejo, which are allowed to make up a maximum of 50% of a final blend, as well as three indigenous – but at the time very rare – varieties in the form of Tempranillo Blanco, Maturana Blanca and Turruntés.
Campo Viejo winemaker Roberto Vicente in the brand’s new experimental winery
For all this work to broaden Rioja’s offer, Barré is wary of venturing too far from the region’s traditional offer. “We just want to make sure we don’t confuse people,” he remarks. “I think Navarra made a mistake a few years ago by going out of its strength, great rosé wines, and going for reds like Rioja and whites too – it’s confusing.” In short, Barré sums up: “White is coming but the hectares are limited so it will take time. If we want to be credible it has to be slow and at a premium level.”
Broadening his gaze to the group’s wine division as a whole, Barré highlights the “important statement” sent out by last year’s move to rebrand this from Premium Wine Brands to Pernod Ricard Winemakers. “It means we all belong to Pernod Ricard and wine is a key pillar of the overall strategy,” he explains. From an internal perspective, he notes the mutual advantage for these brands’ winemakers of annual visits to each other’s winery. “That really helps,” remarks Barré. Alluding again to possible developments on the horizon for Campo Viejo, he adds: “The New Zealand winemakers have fantastic expertise in white wine.”
While spirits remain the dominant force in Pernod’s portfolio, Barré is quick to justify the group’s ongoing significant investment in its wine division. “Today wine is very important,” he insists. “You can be a leader in spirits but there are certain consumer occasions that you cannot address with spirits. A key part of our strategy is to address all those occasions.”