Wednesday, 26 January, 2022

Pernod Ricard toast with Chinese Wuliangye

The Pernod Ricard group announced on Wednesday that it is entering into “strategic cooperation” with the Chinese spirits giant Wuliangye, one of the main producers of “baijiu”, a white alcohol that is national emblem in China and that the French will help distribute in Asia.

Pernod Ricard and Wuliangye intend to “jointly develop their regional distribution networks, starting with Southeast Asia, with potential subsequent expansion to other markets in Asia and beyond”, according to the terms of the memorandum of understanding. agreement signed between the two groups, they specify in a joint press release.

Pernod Ricard, world number 2 in wines and spirits, will thus be able to help its partner to market its production of “baijiu” (literally “white alcohol” in Mandarin) internationally.

Capable of reaching 55 degrees of alcohol, this transparent cereal-based liquor is by far the most popular strong alcohol in China, where it is ubiquitous at banquets, family celebrations and Lunar New Year’s Eve.

About 10.8 billion liters of this drink were consumed last year in the world, mainly in China, according to a study by International Wine and Spirit Research (IWSR), a London institute specializing in wines and spirits, or more than whiskey, vodka, gin or rum combined.

Alongside his great rival Kweichow Moutai, Wuliangye (whose name means “five-grain liqueur”) is a juggernaut in the sector: in the first half of 2019 it achieved a turnover of 27.2 billion yuan (3, 5 billion euros, + 27% over one year), for a net profit of 9.3 billion yuan (+ 31%).

Listed on the Shenzhen Stock Exchange, Wuliangye has a market capitalization of around 510 billion yuan (66 billion euros), against some 44.2 billion euros for Pernod Ricard.

But its activity remains essentially confined to the Chinese market: “The Asian market beyond China will be an extremely crucial step for Wuliangye, at a time when he ventures into international markets,” commented the president of the Chinese giant. , Li Shuguang.

He will be able to benefit from “the established network and the experience of Pernod Ricard”, confirmed Philippe Guettat, CEO of Pernod Ricard Asia.

For Pernod Ricard, the challenge of this partnership will also be to strengthen itself in China, a crucial market where it generates 10% of its sales. China is the group’s second market, tied with India, after the United States, according to Pernod Ricard.

The group had also announced in August from China the construction of a single malt distillery in Emeishan in Sichuan (center).