Data drives Pernod Ricard’s move for The Whisky Exchange - comment
Earlier today, Pernod Ricard agreed to buy specialist spirits retailer The Whisky Exchange. Lucy Britner takes a look at the deal and what it means for the drinks industry
Though the financial details were kept under wraps, the nature of the acquisition tells us a lot about where Pernod Ricard is putting its eggs – well, some of them, anyway. In the deal statement, the Jameson-owner’s CEO Alexandre Ricard said: “E-commerce is a key channel in our long-term strategy.”
And The Whisky Exchange’s website claims the e-commerce platform is “the internet’s number-one specialist retailer of whisky and other spirits, serving thousands of satisfied customers every week”.
The need to be better at reaching the drinker at home has been brought into sharp focus over the past 18 months, as direct-to-consumer online sales have soared. At the same time, the technology and infrastructure around e-commerce has advanced more quickly to meet that growing demand – demand driven first by necessity but then by convenience. And once a consumer has enjoyed such convenience, it’s unlikely they will go back.
Campari Group and Moët Hennessy, too, have moved deeper into e-commerce, with their joint venture, announced in July. The JV revolves around Tannico, Campari’s online retailer for wines and premium spirits, and Tannico chief executive Marco Magnocavallo said at the time: “With the joint backing of Moët Hennessy and Campari, Tannico will have the firepower to consolidate the fragmented European e-commerce sector and offer a qualitative, sizeable and integrated route to market option catering to the needs of all its wines and spirits suppliers.”
Let’s not forgot, though, that winning in e-commerce for the multinationals isn’t just a reaction to the pandemic. In 2018, AB-Inbev’s incubator unit snapped up Atom Brands, the parent company of global e-commerce platform Master of Malt.
What these kinds of deals give big companies isn’t just another route to market. They offer a rich source of data: who’s buying what and when, from where and how much are they willing to spend? Drinks companies can use this data to spot trends, develop new products and time activations.
Meanwhile, there’s also the added bonus of online activity, such as masterclasses and tastings. Though we can now meet in person, continued uncertainty around both Covid and that old chestnut of “convenience” mean that consumers will still want online activities – no train ticket required.
In terms of how Pernod’s acquisition will affect The Whisky Exchange’s competitors, I think we will see more activity from Amazon, with companies that don’t quite have the same firepower as Pernod making the most of Amazon’s extremely wide reach and speedy delivery times. Elsewhere, we could see more activity from the likes of Deliveroo and Uber Eats. The companies have branched out into grocery – what’s to stop them developing specialist drinks services?
In Pernod Ricard’s results for the year to the end of June 2021, the company said e-commerce grew 63% in the 12-month period, though Alexandre Ricard said the division is still less than 5% of the business.
It will be interesting to see how much this acquisition moves the dial.