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Pernod’s Agency Brand Aversion Cools Talk of Cuervo Agreement

Dec. 13 (Bloomberg) -- Pernod-Ricard SA, France’s biggest distiller, said it doesn’t plan to take on “agency brands” in the Americas, cooling speculation that it may take over Diageo Plc’s distribution agreement for Cuervo tequila outside Mexico.

“I don’t see that agency brands are the way forward for us,” Philippe Dreano, the head of the company’s Americas unit, said today on a call with analysts. Agency brands are typically beverages that distillers distribute for other drink-makers in markets where they may have a stronger sales force.

Larger competitor Diageo said Dec. 11 it abandoned talks to buy Jose Cuervo and will seek to end its 26-year-old distribution agreement. That spurred speculation among analysts including Laetitia Delaye at Kepler Capital Markets in Paris that Pernod may take on distribution of the brand.

“We have no plan concerning agency brands,” Dreano said today. He didn’t directly comment on Cuervo.

Pernod’s largest agency brand is in Brazil, the executive said, where the company sells Teacher’s whisky for Beam Inc. Distillers derive less profitability from such brands compared with wholly owned brands, he said. There is “no strategic need” for any agency brands in Pernod’s own range of drinks in the Americas, which includes Chivas Regal Scotch whisky and Absolut vodka, among others, according to Dreano.

“We have a quite comprehensive portfolio, scale in most markets, and the job we have to do now is to grow organically what we have,” Dreano said.

To contact the reporter on this story: Clementine Fletcher in London cfletcher5@bloomberg.net.

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net

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