Pernod ‘not losing sleep’ over agave shortage
Pernod Ricard’s chief executive, Alexandre Ricard, isn’t losing sleep over the current agave shortage, despite the fact that it’s putting pressure on Tequila prices.
Speaking to the press during a roundtable at Beefeater distillery in Kennington this week, Ricard seemed unruffled by the scarcity of agave at the moment.
“With the current agave shortage the price of agave has soared, which is putting pressure on margins and the reaction has been to raise prices but we’d prefer a shortage to an oversupply. We need to remain focused and increase our prices where we can but I’m not losing sleep over it,” Ricard said.
“We’ve invested a lot in Tequila over the last few years with Altos and Avión, which we recently fully acquired. Mezcal is buoyant and an up-and-coming category and we’re happy with its performance.
“High-end Tequila is being enjoyed more at high energy moments of consumption like nightclubs alongside Champagne and vodka, so it will be interesting to see how big the category can get,” he added.
As for whether the legalisation of cannabis in the US could pose a serious threat to the drinks industry as consumers switch from wine and spirits to weed, Ricard said it was “too early” to be able to make an accurate judgment on the situation
“We’re monitoring the cannabis situation in the US and Canada and are looking at its impact. It’s a bit early to have a clear view on the impact cannabis will have on our industry,” he said.
The needs of millennial drinkers were addressed a lot over the course of the discussion, with Ricard pointing out that younger consumers are less brand loyal than their predecessors.
“Loyalty is the biggest difference of the new generation. People used to be loyal to one brand but millennials are loyal to a number of different brands depending on their environment,” he said.
“Our marketing teams are no longer divided by segments but by moments of consumption, from apéritifs and high energy party moments to enjoying drinks with friends. The trend of drinking less but better plays perfectly with our strategy.
“We’re a terroir business. All of our brands have a home and are produced by a community. Today’s consumers want authenticity, heritage and quality,” he added.