MESSAGE FROM THE CHAIRMAN & CHIEF EXECUTIVE OFFICER

ALEXANDRE RICARD
 

The memory of France’s second FIFA World Cup victory in the summer of 2018 will remain with me for a long time. While a remarkable sporting achievement in itself, what really struck me was the millions of people who celebrated the win with such collective zeal. Crowds of people spontaneously converged on even the smallest of village squares, strangers brought together by their shared urge to celebrate this exceptional event.

How do you explain this desire to be united in joy? The obvious explanation is that the need for sharing and being together is simply part of human nature; it brings us a sense of wellbeing. That’s what we mean when we speak about “convivialité” – and what is more convivial than sharing a drink and sharing good times with friends old and new?

Now the point here is not to glorify alcohol. There is no conviviality to be had in excess – quite the contrary, in fact. But like the social connections it nurtures, a certain art de vivre is born through moderation and keeping things in balance. This is precisely the meaning of our vision “Créateurs de Convivialité”, and the underlying theme of our first corporate campaign that will be deployed over the next fiscal year. To prove our hypothesis, we produced a short documentary in which we travelled across the globe to meet real-life consumers. Irrespective of culture and social origin, the film reveals this universal desire to come together and share moments of pure and authentic joy. Twenty years after the death of my grandfather and Group co-founder Paul Ricard, his motto to “Make a new friend every day” has acquired new relevance in an increasingly connected and virtual world.

We have linked the achievement of our vision “Créateurs de convivialité” to our ambition. The day when our premium brands underpin all moments of celebration, occasions for sharing and get-togethers among friends – in short, every experience of conviviality – is the day we will become the de facto market leader.

To pursue this ambition, we must succeed in navigating an increasingly complex environment to surmount the following five challenges:

  1. Address the challenges and seize the opportunities of a new geopolitical context, characterised by the rise of protectionism and a dramatically new consumer landscape; 
  2. Transform the technological revolution – Big Data, artificial intelligence, connected objects, etc. – into a growth driver; 
  3. Pre-empt the consumption patterns of new emerging classes in countries undergoing rapid demographic and economic development; 
  4. Satisfy the desire for more authenticity, transparency, proximity and environmental protection; 
  5. Attract, retain and develop talents by rethinking our ways of working.

ONLY COMPANIES THAT UNDERTAKE AN IN-DEPTH ORGANISATIONAL TRANSFORMATION WILL SUCCEED IN IMPROVING THEIR AGILITY AND PERFORMANCE, THEREBY MAKING THE MOST OF THIS CHANGING ENVIRONMENT.

Only companies that undertake an in-depth organisational transformation will succeed in improving their agility and performance, thereby making the most of this changing environment. The Group’s Executive Committee and I initiated this transformation three years ago with the implementation of a new consumer-focused business strategy as well as a plan for operational excellence, the reorganisation of our key markets (United States, China and Travel Retail), the roll-out of an ambitious digital roadmap and luxury strategy, a focus on promising innovations and the creation of Pernod Ricard University for our employees. This has been possible only by virtue of what I call the “Mindset for Growth,” the all-conquering mindset demonstrated by each of our 18,900 employees.

The results speak for themselves: accelerated growth, with sales up 6% compared with 3.6% last year. What’s more, this growth is diversified and spread across all our regions. Our margins are beginning to improve, profit from recurring operations is up 6.3% and we have reduced debt by nearly one billion euros year-on-year. Based on these positive figures we are increasing shareholder dividends, with a payout ratio revised to 41%. Yet our financial discipline has not prevented us from preparing for our future, as reflected in the rise in our marketing expenditure.

On that note, what will tomorrow bring? Nothing is certain, and I dare say it’s still only the beginning. While we have solid foundations, much still needs to be done to keep up the pace and it goes without saying that we will continue to transform our organisation and focus on growth. The new targets that we have set for our markets directly reflect this, with organic growth of our current operating profit expected between +5% and +7%. In order to attain this goal, we will continue to implement our key strategic drivers consistently across all our markets: operational excellence, investments to strengthen our brands and key markets, innovation and dynamic portfolio management. We are also launching a number of new initiatives such as “TransfoRHm,” a wholly revised talent management policy, as well as an optimised financial management model “Finance 4.0,” the search for new sources of growth through the monetisation of our experiences, and lastly, deploying a new Sustainability and Responsibility platform with new targets identified in our 2030 roadmap.

While the current monetary and geopolitical environment can only be described as uncertain, rest assured that we are primed and ready to go. A few days before publishing this annual report, 300 of our most senior managers from around the world came together at our Pernod Ricard University training centre. The motto for our gathering perfectly encapsulates our continued determination: “Better, agile, together: transform and accelerate.”

Discover our 2017-2018 Integrated Annual Report

Excessive drinking is dangerous for the health; alcoholic beverages should be consumed with moderation.

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