Pernod Ricard Dumps Most Wine Holdings as Grapes Sour

Paris-based Pernod Ricard announced Wednesday that it’s selling most of its wine portfolio to a consortium of Australian wine investors.

Photo of four Jacob's Creek wine bottles
Photo by Eva Rinaldi via CC BY-SA 2.0

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Rather than let a small business segment wither on the vine, Paris-based Pernod Ricard announced Wednesday that it’s selling most of its wine portfolio to a consortium of Australian wine investors.

That leaves the maker of Absolut vodka, Jameson whiskey, and Havana Club rum in high spirits, so to speak.

The Grape Escape

Pernod will hang on to its champagnes and US and French wine brands, as well as labels in Argentina and China. But a slew of popular wines from Australia, New Zealand, and Spain are set to change metaphorical cellars. Among them are Jacob’s Creek, Church Road, and Campo Viejo, which, pending regulatory approval, will belong to Australian Wine Holdco (AWH).

AWH, whose backers include Bain Capital, said it will combine Pernod’s wine division with Australia’s second-largest wine producer, Accolade Wines, which it also owns. Pernod can focus on its premium spirits, which are also its premium moneymakers, and AWH can focus on winning back one big market:

  • Pernod made $13.2 billion in net sales last year, up 10%, and posted a $3.6 billion operating profit, up 11%. But wine sales comprised just 4% of business, down 2% year-over-year.
  • AWH is hoping that the end of crippling tariffs on Australian wine imposed by China, which has the biggest alcohol market in the world, will revive a once-nascent market. Chinese wine imports from Australia were an infinitesimal $900,000 last year compared to $1 billion in 2020, the last year before the tariffs — but China’s overall wine market has cooled, as total imports fell to $1.2 billion last year, half of what they were in 2019.

Dry Home Turf: While Pernod is keeping its French wines, the cliché no longer holds that it’s a guaranteed market. Wine consumption in France has fallen nearly 70% since 1960, from roughly 120 liters per capita per year to under 40 liters in 2020, according to Le Monde. Following the success of America’s non-alcoholic craft beer maker Athletic Brewing, maybe it’s time for someone to launch Vinification Athlétique.