20/05/2021

How might a Pernod Ricard & Brown-Forman merger shift the industry landscape?

IWSR looks at how the beverage alcohol industry landscape could change if Pernod Ricard and Brown-Forman were to merge

Amid speculation in the Financial Times that Pernod Ricard and Brown-Forman could engineer the spirits industry’s ‘only remaining mega-merger’, IWSR data makes it clear that a merger could have a material impact on beverage alcohol market share and the industry landscape.

Global Spirits Market

A combined Pernod Ricard and Brown-Forman would rival Diageo’s supremacy in the global spirits market. Pernod Ricard is already a strong global number two behind Diageo in terms of value, and a merger with Brown-Forman would cement that position.

Whisky Market

Brown-Forman’s dominance of the American whiskey market in the US is driven by a portfolio of brands that includes Jack Daniel’s, Woodford Reserve and Old Forester.

Brown-Forman’s whiskey portfolio also gives it a dominant position in many international markets, including in the UK (70% category share by volume) and France (85%).

What is more, Pernod’s distribution network could help Brown-Forman to conquer new markets, such as India, where it currently has only a small presence. Pernod’s strong position in Indian whisky could provide Jack Daniel’s with a launchpad in what remains a difficult market to navigate.

Tequila Market

A merger could elevate a combined tequila business into fourth rank in the crucial US market (driven by Brown-Forman’s investment in the tequila category), albeit with a market share still below 10%, and would create a strong number two in the UK.

There are other opportunities that could come out of a Brown-Forman and Pernod Ricard merger. For example, it could give the current Pernod Ricard portfolio increased access to the US market for the Cognac, wine and Scotch whisky categories. Conversely, a merger could strengthen Brown-Forman’s current position in the gin, vodka and Scotch whisky categories as well. The potential synergies are clear.

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