Luxury consumers or consumers of luxury? Here’s how this company reshapes its luxury mindset! [Monday: Marketing Marvels]
What are some of the things that come to your mind when you hear the word, “luxury?”
Expensive goods or services?
High quality products?
We all have our different views on luxury. For some, luxury is only for a small demographic of the wealthy who can afford these kinds of products and services.
However, the luxury industry has undergone significant changes over time!
… and for this luxury drinks giant, adapting to these changes meant reshaping its “luxury mindset” and making its elite portfolio more accessible to a broader range of consumers.
Pernod Ricard SA is a French company best known for its anise-flavored alcoholic beverages, Pernod Anise and Ricard Pastis. The company is the world’s second-largest wine and spirits seller.
Pernod Ricard has a luxury portfolio that it calls “Le Cercle.” This portfolio consists of brands such as:
- Royal Salute 21
- Martell Cordon Bleu
- Perrier-Jouët Belle Epoque
- Absolut Elyx
- Ballantine’s 30
- The Glenlivet 18
- Chivas Regal 18
- Plymouth Gin
Reaching not only “luxury consumers” but also “consumers of luxury”
Since 2017, the company has implemented a global framework to better position its brands in the drinks category and speak to a wider group of “consumers of luxury.” This new framework enabled Pernod Ricard to foster an aspirational and desirable approach based on consumer experiences.
Tareef Shawa, luxury and CRM director at Pernod Ricard, explained why the company made a move to target not just luxury consumers but also consumers of luxury:
“Initially, we said we are looking at ultra-high net worth individuals or super wealthy billionaires, which is great but they are very difficult to find and they are not necessarily faithful. But what we do know is that many of us are not just luxury consumers but consumers of luxury… even if it’s just once a year for a special birthday or anniversary or even every Saturday night on a romantic date for example. We find those consumers everywhere.”
Shawa also said that the company’s broader approach will make its brands more friendly, democratic, and convivial towards consumers.
To strengthen its portfolio, Pernod Ricard adopted 3 strategies:
- Premiumizing its portfolio through new products and line extensions.
- Identifying new moments of convivialité (English translation: Conviviality or friendliness―the company’s corporate signature).
- Creating experiential activities that feature educational tones for Le Cercle. This accounts for 10% of Pernod Ricard’s sales and is present in 35 markets around the world.
The main idea of Pernod Ricard’s approach is to play on consumers’ passion points such as art and fashion to create more memorable experiences while providing information about the company’s brands.
In September 2017 at the London Design Week, Pernod Ricard ran an event called “L’Eden by Perrier-Jouët (The Garden by Perrier-Jouët)” that featured an art installation from Parisian designer Noé Duchaufour-Lawrance and a “bio-responsive garden” by design agency Bompas and Parr. Pernod Ricard used this concept to promote the brand’s champagne.
In a similar experience for its whiskey brand Chivas Regal, Pernod Ricard created “The Blend,” a pop-up bar in London that enabled visitors to learn about the art of blending whiskey.
Thanks to these strategies, Pernod Ricard resonated with millennials and also made its brand known in emerging markets!
Digitalizing the World of Premium Drinks
Aside from adopting a new framework to reach a wider audience, Pernod Ricard is making its marketing strategy more responsive to consumers’ needs in an increasingly digital environment.
The company started implementing this strategy in 2019 through digital advertising and the Internet of Things (IoT).
To help its marketers around the world embrace the shift to digital, Pernod Ricard established a Global Media Hub that works closely with its beverage brands in developing in-house digital tools and resources.
The Hub relies on data analysis of Pernod Ricard’s running digital and social media campaigns to provide suggestions, improvements, and best practices in marketing.
The creation of this Hub helped the company shift to performance-driven metrics, improving its strategy and operations alignment.
Internet of Things (IoT)
One of the IoT experiments created by Pernod Ricard’s Breakthrough Innovation Group is the OPN, the company’s first connected drinks library.
The OPN is an elegantly designed collection of cartridges placed on a tech-smart tray that contains Pernod Ricard’s spirits. The tray has an ability to track remaining levels of liquid and notify the OPN system via the company’s app or website.
The app has a catalog of over 300 cocktails and offers a simple visual guide for users. Consumers can customize the OPN’s cartridges based on the spirits or wines they like.
Other than the OPN, Pernod Ricard experimented with making its products’ packaging digitally connected to consumers’ devices and other technologies to make the transaction process more informative and fun for customers.
Developing a NFC-enabled Malibu bottle that helped consumers unlock Malibu feature music, win prizes, and learn about new cocktails…
… and launching Ballantine’s Lumen bottles that could project video, text, or image sent from a smartphone that’s connected to the bottle via Bluetooth!
The company considered these experiments as both PR moves and consistent attempts to keep in touch with a wide range of consumers.
In the past five years, Pernod Ricard SA has recorded revenues of:
- EUR 9.0 billion in 2017
- EUR 8.7 billion in 2018
- EUR 9.2 billion in 2019
- EUR 8.4 billion in 2020
- EUR 8.8 billion in 2021
*Pernod Ricard SA reports full-year earnings every June 30, the end of its financial year.
Based on these numbers, we can see that the company’s digitalization and premiumization strategies had positive contributions as Pernod Ricard recorded high revenues from 2017 to 2019!
Pernod Ricard SA’s Earning Power: Valens Research vs. As-reported numbers
Pernod Ricard SA (RI:FRA) makes for a great case study that we come back to regularly. One great reason?
The company has proven itself to be a better earning power generator than investors might think.
So, how well has Pernod Ricard been growing its business in the past years?
The research doesn’t lie—nor do the results. Earning power (the blue bars) continues to show results higher on average than what traditional databases show.
The blue bars in the chart above represent Pernod Ricard’s earning power (Uniform return on assets). Historically, Pernod Ricard has seen generally robust profitability. Its Uniform ROA ranged from 12% to 29% in the past sixteen years, or an average of 21%. Uniform ROA is at 17% in 2021.
The global ROA is just 6%.
The orange bars are the company’s as-reported financial information. If you relied on these numbers, you will see a company with understated profitability. As-reported ROA (return on assets, a measure of earning power) only ranged from 4% to 6% in the past sixteen years. Its as-reported ROA in 2021 was only at 5%, which is over 3 times lower than its Uniform ROA in 2021.
That’s what you’ll see in Yahoo Finance, Google Finance, and most other databases.
The company’s stock price also performed better than the rest of the stock market over the decade, which we can see in the blue line in the chart below. Its returns have been well above the market.
The numbers show that Pernod Ricard has been doing well and making a profit.
According to the company’s website, Pernod Ricard’s ambition is to turn every social interaction into a genuine and friendly experience.
One of the avenues where the company does that?
Through its manpower!
Pernod Ricard believes its employees add a human touch to its products using their own personality and passion. Although they are born in different lands and cultures, one thing is certain: They are all…
“Créateurs de convivialité (creators of conviviality)!”
The result of that?
Pernod Ricard’s products travel the world, providing consumers across the globe with “good times from a good place!”
About The Dynamic Marketing Communiqué’s
“Monday Marketing Marvels”
Too often, industry experts and the marketing press sing the praises of some company’s marketing strategy.
…Only for the audience to later find out that their product was a flop, or worse, that the company went bankrupt.
The true ROI in marketing can’t be separated from the business as a whole.
What good is a marketing case study if one can’t prove that the company’s efforts actually paid off?
At the end of the day, either the entire business is successful or it isn’t. And the role of marketing is always paramount to that success.
Every Monday, we publish a case study that highlights the world’s greatest marketing strategies.
However, the difference between our case studies and the numerous ones out there, is that we will always make certain that the firm really did generate and demonstrate earning power worthy of study in the first place (compliments of Valens Research’s finance group).
By looking at the true earnings of a company, we can now rely on those successful businesses to get tips and insights on what they did right.
We’ll also study the greatest marketing fails and analyze what they did wrong, or what they needed to improve on. We all make our mistakes, but better we learn from others’ mistakes—and earlier, rather than later.
Hope you found this week’s marketing marvel interesting and helpful.
Stay tuned for next week’s Monday Marketing Marvels!
Head of Marketing
Valens Dynamic Marketing Capabilities
Powered by Valens Research