The news that Pernod Ricard has sold a portfolio of wine brands representing 90m litres, and including Jacob’s Creek, Orlando and St Hugo from Australia, Brancott Estate, Church Road and Stoneleigh, from New Zealand and Azpilicueta, Campo Viejo, Tarsus and Ysios from Spain to AWL – Australian Wine Holdco Ltd - should have come as no surprise.
The family-run French spirits giant has made no secret of its desire to be rid of these assets, and was only waiting for a buyer ready to take them all off its hands as a single package.
It is revealing that the brands – though widely known in the wine industry - only represented 4% of Pernod Ricard’s revenues. Spirits brands like Absolut, Chivas Regal, Glenlivet, Jameson, Martell and Ricard are far more attractive.
What is more interesting than the brands that were included in the sale, were the ones that weren’t.
The brands Pernod Ricard retained
Champagne behaves far more like spirits, in its margins and marketing, so it was always to be expected that Pernod Ricard would hold onto these. It has, also, however, retained its majority shareholding in the Chateau Sainte Marguerite rosé brand in Provence. This 540ha organic estate was incorporated in the company’s Champagne division when it was acquired.
Also retained has been Pernod Ricard’s Californian properties Mumm Napa and Kenwood, the long-established 100ha Sonoma estate it acquired in 2014. Like Chateau Sainte Marguerite, it is clearly considered as an asset with the potential to produce increasingly high-margin, premium-price wines. Unlike Jacob's Creek, Brancott Estate and Campo Viejo, none of which has been able to develop a market for 'aspirational luxury' wines.
Logically, the only eye-catching oddity in the transaction was the retention of the Argentine brand Etchart, which might have seemed to have been destined to join the others in the disposal. Was Accolade deterred by the financial uncertainty associated with that South American country?
As others have noted, the Pernod Ricard-Accolade deal is not unlike the one Constellation signed with Gallo when it sold its less premium brands.
How AWL will handle its new acquisition and whether it sells off some of the brands, remains to be seen. It is worth remembering that the international consortium only bought Accolade and 50 brands, including Banrock Station and Hardy’s in February of this year.