Contents

2-3 A message from 70% of activity realised outside of the Chairman and 75% does not involve anis

4-9 Groupe presentation Our presence around the world Strategy, principles, organisation Our major brands

10-15 The Year in Review A winning strategy with Key figures Key events

16-27 News from the regions France: 31% of consolidated turnover 16 Europe: Pernod ’s leading market region 19 The Americas: Solid assets throughout the continent 22 Cuba: the birthplace of cocktails 24 Australia: double digit growth in export 25 Asia: the Groupe consolidates its positions 27

28-29 The Stock Market The Share: + 23%

30-32 Human Resources A confirmed trend towards internationalisation

1 The Chairman’s message The Chairman’s message 70% of activity is realised outside of France and 75% does not involve anis

We have just completed a record year, record in terms of turnover, profits and NONALCOHOLIC ACTIVITIES: THE BALANCE our level of diversification. All over the world, with the exception of France, The alcohol-free activities have always represented a key area of diversifica- our sales of spirits have increased, despite a rather slack world market, whilst tion for our Groupe. And this year again this strategy proved to be well-founded our “world ” have been able to benefit from a positive environment. At since the performances recorded by this sector have made up for the downturn the same time, our nonalcoholic activities have contributed considerably to the in the French spirits market, a slump which followed the new increase in duties increase in sales and profits. on alcohol which was enforced at the beginning of the year. PATRICK RICARD: AN EXCELLENT Our nonalcoholic activities have grown very healthily, in volume and profit- SPIRITS: ANIS - A RANGE OF PRODUCTS WITH WORLDWIDE POTENTIAL VINTAGE ability. In 1997 they represented over 52% of our turnover, wildly exceeding the objectives we had set. In this sector our subsidiary SIAS, the world leader in Outside of France our activities fruit preparations, experienced rapid growth in an expanding market. In Fran- now represent almost 70% of the ce, Ireland and Great Britain, under the impetus of the teams which we set up, Groupe’s total turnover. This is our nonalcoholic activities continued to increase. Today they contribute fully to an important stage in our devel- the profitability of the Groupe. opment. All the more so because our EXTERNAL GROWTH: OUR WINNING STRATEGY geographical diversification has With the acquisition of the company Larios, we now have in Spain a strong been accompanied by a signifi- network and a well established brand of , whose potential extends well cant expansion in our range of beyond the frontiers of the Spanish market. With Epom in Greece and Jan products. According to the Becher in the Czech Republic, two companies which we also integrated in 1997, objective which we set ourselves we are reinforcing the structure of our distribution network in Europe. at the very beginning when we In this field, our philosophy has remained constant: we add to our sales forces founded the Groupe, anis-based highly motivated networks which have already either established a leading spirits, to which we owe our position or a strong competitive position in their market and who are showing name and our history, were not good profitability. Often they also possess strong domestic brands which we can to represent more than 25% of add to our portfolio. And from their point of view, we give our new subsidiaries the consolidated “wines and international brands as well as an established means of exporting their own spirits” activity. They continued brands. however to expand throughout This strategy has proved to be valuable for our priority brands and for the 1997, whether in volume, value development of the Groupe which today boasts a leading position in its Euro- or market share, depending on pean market and very strong structures on the other continents. the country and the region. The range of anis brands also grew SIMPLE, SENSIBLE PRINCIPLES: SUPPORT OUR SHAREHOLDERS with the acquisition of a Greek It is our simple principles which have enabled us to maintain our profit levels anis, the Mini. and keep dividend payments high. Our shareholders are well aware of this. Since Together with our range of the creation of the Groupe, its share price has increased ten-fold. During 1997, “wines of the world”, our wiskies despite a rather bumpy beginning to the year, the Pernod Ricard share caught and our white spirits have beco- up with the CAC 40 and then at the beginning of 1998, overtook it. Finally, if we me Pernod Ricard’s key growth compare our performances on the financial markets with those of our major areas, as have our brands with a international competitors, it becomes clear that we are in a very good position. heavy regional basis, brands We have happily never confused the race to become a vast group with the which are often very profitable. pursuit of profitability. And for that our shareholders are grateful.

3 Groupe presentation Groupe presentation Our presence around the world

■ Wines and spirits ■ Nonalcoholic and products

PR AMERICAS 100% WORLD BRANDS DUTY FREE RICARD 100% PR EUROPE 100% PR AUSTRALIA Cusenier Saic / Etchart (Argentina) 100% (GREAT BRITAIN) 100% Galibert & Varon 99,3% Brand Partners (Norway) 50% (AUSTRALIA) 100% El Muco Bebidas (Venezuela) 100% Bisquit 100% Epom (Greece) 95% Orlando Wyndham 89,5% Nihco (Canada) 100% IGM Deutschland (Germany) 100% Two Dogs 100% PR Chile (Chile) 100% Lizas & Lizas (Greece) 100% Orlando Wyndham New Zealand 100% PRC Diffusion (Caribbean) 100% CAMPBELL DISTILLERS Perau Associates (Sweden) 100% ERNOD 100% PR Mexico (Mexico) 100% (GREAT BRITAIN) 100% P Perisem (Switzerland) 100% Cusenier / Crus et Domaines Polacek (Austria) 100% USTIN ICHOLS 100% Caxton Tower (G.B.) 100% PR Belux (Belgium) 67% A N (USA) de France 100% PR ASIA 100% Boulevard Distillers (USA) 70% PR Larios (Spain) 100% Beijing Pernod Ricard Winery (China) 65% Yoo-Hoo Industries (USA) 100% PR Nederland / Cooymans(Holland) 100% PR Rouss (Russia)* 100% Casella Far East.(Hong Kong) 100% Ramazzotti (Italy) 100% Casella Taïwan (Republic of China) 100% Somagnum (Portugal) 75% Dragon Seal (China) 53% GROUP World Brands Denmark Perising (Singapore) 100% (IRELAND) 100% Perithaï (Thailand) 100% INTERNATIONAL 50% (Denmark) 100% BWG Limited (Ireland) 100% World Brands Finland (Finland) 100% Pernod Ricard Japan (Japan) 100% Pernod Ricard South Africa PRK Distribution (Korea) 97,7% (South Africa) 100%

PERINDIA (INDIA)* 74%

PERICEYL (SRI LANKA)* 50%

* Not consolidated in 1997

SIAS-MPA 100% SIAS-MPA 100% SIAS-MPA 100% CSR PAMPRYL 99,2% SIAS-MPA 100% Flavors From Florida (USA) 100% DSF (Germany) 60% SIAS-France 100% SIAS Australia (Australia) 100% Ramsey Laboratories (USA) 100% San Giorgio Flavors (Italy) 100% SIAS Fruit Argentina (Argentina) 100% SIAS Bohemia (Czech Republic) 100% CFP ORANGINA 100% SIAS Mex (Mexico) 100% SIAS Foods UK (Great Britain) 100% SIAS Port (Mexico) 100% SIAS Polska (Poland) 93,1% SIAS-MPA 100% YB SIAS (Austria) 50% SIAS Korea (Korea) 95,6% South Pacific Foods (Fiji) 100%

4 5 Groupe presentation Groupe presentation Strategy, principles, organisation

Our Groupe is constantly implementing various forms of expertise, either DECENTRALISATION: The major production compa- traditional or slightly more avant-garde. However they all share the same THE GOLDEN RULE OF nies (Irish Distillers, Ricard, Per- objective - the pursuit of excellence. OUR ORGANISATION nod, CSR Pampryl, Campbell Dis- tillers, Orlando Wyndham, Austin Pernod Ricard is actually a federa- Nichols etc...) as well as the hold- tion of companies which are large- OUR FOUR POINT ing distribution companies (PR ly autonomous in their own STRATEGY Europe, PR Americas, PR Asia) regions or markets. In its role as a all report directly to head office. As used to say facturing processes, the physiol- flagship, the holding company re- • To concentrate our efforts on a They then manage in a decentral- “Happiness is the pleasure you ogy of drinks etc. And in addition, stricts its own activities to the small group of ten brands or so, all of ised way their own subsidiaries. can give to people.” Our mission is each of our production subsidi- functions of a chief of staff. On a which have worldwide potential W HISKEY NOW REPRESENTS A QUARTER The companies which produce also to create and sell drinks, alco- aries also has its own laboratory. day to day basis, its deliberately OF OUR ACTIVITY. • The create and acquire our own the Groupe’s key strategic holic or not, which can play a role light team is responsible for the networks in all the key markets THE INDUSTRIAL TOOL: brands define the commercial in all of life’s happiest moments. thought behind and the strategic • To develop, country by country, TO PROCESS FRUITS policy of their brands for the In the same spirit, we also pro- control, as well as the manage- domestic brands with a regional basis AND PLANTS whole world. In return, they dis- duce fruit preparations which are ment of our brand portfolio. It is • To balance our activities with a high- tribute in their domestic mar- used in various yoghurts, ice The Groupe has a world class pro- also responsible for financial engi- ly profitable alcohol-free sector kets, imported brands produced creams and other dairy desserts. duction outfit comprising over 76 neering, marketing research, the by other Groupe companies. manufacturing plants all over the Groupe’s relations with public FUNDAMENTAL AND World Brands Duty Free is re- world (27 of which are in France). authorities, corporate and finan- APPLIED RESEARCH: sponsible for the sales and marke- Some of our warehouses, cellars cial communications, industrial A NUMBER OF FIRSTS ting of all the Groupe’s products and distilleries are among the and logistical coordination, the through the network of tax-free Organised into seven specialist most modern in the world. Others, legal safeguarding of brands and shops at airports, on ferries etc... laboratories, our scientists have on the contrary, have deliberatley external development. It oversees SIAS-MPA, the world’s leading been at the origin of a large num- retained methods of production the consistency of the relationship fruit preparations company, has ber of major innovations within which date back hundreds of with employees and guides the its own network of subsidiaries the food and agriculture industry: years. Every year we process 2.3 work of the research centre. SIAS-MPA: RIGOROUS HYGIENE CONDITIONS. and production plants on all in-vitro cultures, new methods of million tonnes of fruits and continents round the world. cultivation, sensorial analysis and plants, the only ingredients of the creation of new flavours, the our drinks and preparations. development of new aspects of But in the main, the recipes WHATWEDO: CREATE ADDED VALUE, BUILD industrial technology and of manu- AND MAINTAIN STRONG BRANDS. remain secret.

O UR HUMAN STRENGTH: 12 650 MOTIVATED EMPLOYEES, 36% OF WHOM THE PERNOD RICARD RESEARCH CENTRE ARE FRENCH. WORKS CLOSELY WITH THE MAJOR SCIENTIFIC 6 INSTITUTES IN EUROPE AND THE REST OF THE 7 WORLD. Groupe presentation Groupe presentation

Our major brands

ANIS-BASED SPIRITS WORLD WINES:

AND : Jacob’s Creek, St Hugo, Ricard, Pernod, 51, , Coolabah, Mini, 8 Hermanos, , Etchart, Terra Andina, Ramazzotti, . Long Mountain, Dragon Seal, Alexis Lichine, Cruse, SCOTCH, IRISH, CANADIAN, Palacio de la Vega. AND BOURBON : SPARKLING WINES, Clan Campbell, Aberlour, SPARKLING Wild Turkey, Jameson, AND GRAPE-BASED DRINKS, Bushmills, Paddy, LOW ALCOHOL DRINKS: Power’s, Royal Canadian, Canei, Café de , White Heather. Blanc de fruit, Carrington, CLEAR SPIRITS: Chamei, Maison, Ron Havana Club, Trilogy, , , Gin Larios Pernod Hex, Two Dogs. Altaï, Huzzar and CIDERS: Petroff Voldkas . La Cidraie, Loïc Raison, EAUX- DE-VIE: Duché de Longueville, Bisquit and Renault , Flagger, Dagan, E33. Marquis de Montesquiou SOFT DRINKS: , calvados Busnel, Brut de Pomme, Ricqlès, Dorville . Pampryl, Pam-Pam, LIQUEURS: Yoo-Hoo, Champomy, Banga, Soho, Alaska, Zoco, Cusenier Sirop Cusenier, Pacific, and Eoliki Liqueurs, Minerva. Royal Dutch Advocaat, FRUIT PREPARATIONS Millwood, Cusenier cassis. AND FLAVOURS: WINE-BASED APERITIFS Sias-Mpa. AND SWEET NATURAL

WINES: Cinzano*, , , Ambassadeur, Bartissol, Vabé, Porto Cintra, Kuei Hua Chen Chiew.

* in France

8 9 The year in review with Thierry Jacquillat The year in review A winning strategy

We are concentrating our efforts on ten or so major brands, all with In an area which is also linked brands and grape types, particu- ers. In the years to come we are worldwide potential. to cultural habits and local tradi- larly in those countries where expecting that these acquisitions tions, we also believe in the essen- wine comsumption has started will have a “network effect”, ben- tial regional diversity of our port- only recently. I must add here that efiting our major international folio. This is the case with Ramaz- the world still wine market grew brands. It is a short term objective. zotti, an Italian bitter which is considerably in 1997. In total our In this sense, although they are The two main characteristics of For our Groupe, our alcohol-free unquestioned technological advan- enjoying growing success in those wines are up by 10% in terms of sometimes not very spectacular, 1997 are, undoubtedly, the Groupe’s activities happily made up for this. tage and to the intense creativity countries of Germanic tradition. turnover (internal growth). In these activities to integrate new success internationally, both in Over the last few years, we of our teams. Finally, in every market, we have short, the development of Jacob’s subsidiares are always strategic terms of turnover and profits, and have gradually restructured this And at the end of it all we must specific local brands, often market Creek and our other New World for us. And for us this method has the considerable contribution made sector to the benefit of those acti- also highlight our healthy internal leaders or at least in a competitive wines is a priority. been very fruitful since it has by the nonalcoholic sector. vities which give the earnings / capi- growth, despite a slack world spir- position, which contribute to the always enabled us to figure among Did this come as a surprise ? tal invested ratios. Our release of its market and the French slump. With a level of debt at less than profitability of our local market. the champions of asset creation. It is of course the reflection of a Orangina, if it goes ahead, is all We owe this to the quality of our 31% and with significant funds of its long-held strategy. part of this programme. networks. Where does your “wines” sector sit own, the Groupe has the means to What is the outlook for 1998? The growth in turnover On the other hand Sias-MPA within your international range? invest elsewhere. What is your There are of course uncertainties, Does the diversity of your brand (+ 13.3%) is made up of internal and our distribution activities in We are enjoying a huge success approach? for example the Asian crisis and portfolio not automatically lead you growth (at + 4.8%), gains from Ireland and England are highly with the development in the major In 1997 we completed three acqui- its consequences, both in its own to lose the focus of your efforts? currency exchange (at + 5.7%) and profitable and growing much markets of our “world wines” sitions (Two Dogs in Australia, region and elsewhere in the world, In reality, we have chosen a small from increase to our consolidated faster. The world fruit prepara- concept. What we are talking Epom in Greece, and not forget- although the general economic group of ten or so priority brands perimeter definition (at + 6.3%). tions market, of which Sias is the about are varietal wines sold ting Larios in Spain) and we par- environment seems to be positive. for their capacity to win over the For all these three, the interna- leader, is growing at a rate of 5% under our brand names. Jacob’s ticipated, as an investor and as an The French spirits market seems widest range of consumers in the tional factor was key. a year. We are however doing Creek, our Australian range, is operator, in the privatisation of to have picked up and that’s why largest number of countries. In France on the other hand, far better than this, due to an well on the way to joining the Jan Becher in the Czech Republic. our volumes in France should We are investing heavily in these destocking by the retail pack of the world’s best selling These business operations, all return to their usual levels. brands, six of which al- industry following the quality wines. located outside of France, gave us And if to that we add the ready feature in the world rush buying which This is why we are using the an added turnover of over 1 billion advantages brought by our geo- league table of “over anticipated the increase same teams to develop our ranges francs in 1997, as well as two graphical diversification, the a million case brands”. in duties in 1996 led us to of Chilean, Argentinian and South brands, Larios and Becherovka, dynamism of our strategic brands, Ricard, Jameson, Havana suffer a 3.4% fall in turn- African wines. We also have a few which are their own market lead- the consolidation of our market Club, Clan Campbell to over, although we infact French varietal wines. shares, the even spread of our name but a few. These increased our levels of Our success stems from the different activity sectors and the brands are experiencing market penetration. And excellent value for money we quality and enthusiasm of our the fastest rates of grow- today the French spirits provide and from the thorough 12 650 employees, we can really th in the worldwide mar- market remains firmly understanding of the concept of approach this year with confidence. ket. And to these you can depressed, due to exces- add Suze and our new sive taxation. brand of gin, Larios. Asset creation within the Groupe (in FF million) 1995 1996 1997 Operating profit after taxes 1 466 1 545 1 729 Average employed capital 14 141 15 002 16 625 Capital costs 10,0% 9,8% 9,1% Asset creation 52 75 217

THIERRY JACQUILLAT, PRESIDENT

10 11 The year in review The year in review Key figures

Workforce in1997: 12 652 of whom 8 089 abroad

Consolidated turnover excluding Consolidated profit (in FF million) Breakdown of turnover, excluding Breakdown of turnover, excluding duties and taxes (in FF million) 1997: Consolidated pre-tax profit: 1 956 FFM (or 294 M *) duties and taxes, by sector duties and taxes, by geographical zone 1997: 19 049 million francs (or 2 865 M *) Consolidated Groupe share net profit: 1 354 FFM (or 204 M*)

■ Export ■ Consolidated Groupe share net profit Wines and spirits ■ France ■ France ■ Consolidated pre-tax profit ■ France ■ Abroad ■ Europe Nonalcoholic drinks and products ■ Rest of the world ■ France ■ Abroad

Groupe share net profit per share Net dividend payment per share (in francs) Share price (in FF) Operating profit by sector, (in francs) 1997: 9,50 francs (or 1,43 *) Price on 12.31.97: 354 francs (or 53 *) France and outside of France 1997: 24,02 francs (or 3,61 *) Stock market capitalisation on 12.31.97: 19 961 million francs (or 3 002 M *)

* 1 Euro = 6,65 FF ■ Closing Pernod Ricard price Wines and spirits: ●●● SBF 250 ■ France ■ Europe ■ Rest of the world Nonalcohol: ■ ■ ■ 12 France Europe Rest of the world 13 The year in review The year in review Significant events

With three acquisitions and the purchase of a share interest, the reorganisa- Aberlour acquired even more BANGA DINGUE AND tion of its distribution network and some major brand news, 1997 is good in elegance and simplicity and BANGA MAXI FRUITS illustration of the strategic ambitions of the Groupe and of its determination Jameson has reinforced its own These two highly successful to achieve them. hallmarks. launches have breathed fresh life The duty free range, available into our sales of fruit drinks. particularly widely in airports and In 1997 the success of our on ferries also enjoys new packag- nonalcoholic sector compensated ing projects and range extensions. PR REGIONS Pernod Ricard also acquired for the problems encountered the company Epom which produces TREND: THE GROUPE’S on the French spirits market For the drinks sector the year saw the ouzo Mini and Jan Becher NEW LOW ALCOHOL resulting from the increase the Groupe set up the new organi- whose brand of bitters Becherovka DRINKS in taxes. sation of the distribution network is a best seller in the Czech Re- A RANGE FOR YOUNG FASHIONABLE CONSUMERS. into three major geographical The fashion started in Great Bri- ORANGINA public, with potential for the zones, headed up by the regional tain where we launched Pernod whole region. Pernod Ricard has signed a letter holding companies: Europe REGIONAL SUBSIDIARIES BRINGING THE Hex (sparkling with blackcur- Each of these acquisitions of good intent concerning the sale (excluding France, Great Britain DECISION MAKERS CLOSER TO THE MARKETS. rant), the success of which shows enables the Groupe to accelerate of Orangina to Coca Cola. The lit- and Ireland), the Americas and no sign of letting up. In the same the penetration of its big interna- tle round bottle is thus all set for Asia Pacific. The objective clearly style, the Groupe also acquired tional brands into the markets an exciting future all over the is to bring the decision making Two Dogs, a lemon-flavoured concerned. In Columbia the Groupe world. The sale is conditional centres closer to the relevant “alcopop” from Australia. Finally, saw fit to set up its own network. however on the result of the markets. The major production Pernod Ricard launched Dagan audit which will be carried out in companies remain directly NEW WORLD WINES and Flagger, two English-style 1998 when the authorities will responsible to Pernod Ricard’s ciders. The sector for low alcohol On the back of its success in then have to officially endorse head office in Paris. drinks sold in small containers is almost all markets around the the agreement between the two in full growth, all over Europe as ACQUISITIONS: LARIOS, world, our range of “new world parties. well as in the United States, Aus- EPOM, JAN BECHER wines” welcomed a new brand, tralia and South Africa. Canyon Ridge, which boasts three The company Larios, the number SITUATED WITHIN THE WALLS OF THE DISTILLE- AUSTRALIAN, SOUTH AFRICAN, CHILEAN, varietal wines grown and produced RY, THE FAMOUS S T D USTAN NOW one Spanish spirits producer, joins ARGENTINIAN, CALIFORNIAN, CHINESE, FEATURES WELL ON THE NEW LABEL. SPANISH AND FRENCH VARIETAL WINES. in California. Groupe Pernod Ricard. Following the regrouping of Larios and A FACELIFT Prac S.A., the Groupe’s strategic FOR PACKAGING brands, particularly Ricard and The packaging of our major Havana Club, enjoy immediate brands underwent some subtile benefits to their volumes and developments. The traditional market shares. In addition, the Ricard label gained a touch more excellent gin Larios is set to take style and was endowed with the advantage of the Groupe’s Euro- prestigious signature of its creator pean network for its first strides - a guarantee of authenticity. into the world of export.

THE WORLD’S THIRD LARGEST BRAND OF GIN IS SPANISH. CONFIRMED WORLWIDE APPEAL.

14 15 News from the regions France: 31% of consolidated turnover

France represents Pernod Ricard’s single most important market, with 31% of sales and 39% of operating profit, even if its relative share is falling, in line with objectives.

ID CARD

• 31% of the Groupe’s total activity Via its specialist subsidiaries, In 1997 the French spirits of which: the Groupe sells and markets a market suffered from a significant very extensive range of French wines and spirits: 15% fall in volumes (6%), due to the and imported spirits. nonalcoholic activities: 16% marked destocking carried out by In France the Groupe also pro- the national accounts. This fol- • 39% of operating profit. duces fruit juices and drinks as lowed the precautionary stock • 27 production plants located all well as fruit preparations for yo- loading at the end of 1996 by the over the country. ghurts and dairy desserts. For the trade, in anticipation of the first time in 1997, the nonalco- • Main French subsidiaries: increase in duties. holic sector exceeded the spirits wines and spirits: Ricard, Pernod RELATIVELY OUR activities in value, in France as well alcohol-free activities: CSR-Pampryl, BRANDS ARE as in the international market. CFPO, Sias-Mpa. INCREASING THEIR SPIRITS: THE INCREASE • 4 600 employees. MARKET PENETRATION IN DUTIES BRINGS THE Within this context the Groupe’s MARKET DOWN French brands also suffered from In France the balance provided by a downturn in volumes. They fell the nonalcoholic sector has com- however less than all their com- pensated for the poor performance petitors and therefore gained mar- recorded by the spirits. ket share. This was particularly the case for Ricard, Pastis 51 and Suze.

20 MILLION LITRES SOLD IN 1997 (+ 7%)

THE GROUPE OF MANY FIRSTS:

The number one operator in the French spirits market, our Groupe is also the leading producer of anis, fruit juices and drinks, cider and calvados, bitters, sweet natural wines and fruit preparations.

17 News from the regions News from the regions Europe: the Groupe’s leading market region

A GOOD PERFORMANCE NONALCOHOLIC Europe, the leading market in the world in terms of purchasing power and FOR THE WHISKIES ACTIVITIES: THE BALANCE consumption, has always been a geographical priority for Pernod Ricard. IS CONFIRMED On the other hand, our whiskies Clan Campbell and Jameson, In 1997 the Groupe’s nonalcoholic propelled by their success in the activities made a key contribution THE RICARD LIVE MUSIC STAGE: MILLIONS international arena, are also OF FANS. to turnover in France, as well as ID CARD experiencing further sales to the operating profits in our increases, in terms of volumes, domestic market. In 1997 three acquisitions made • The largest network in continental ly due to volumes sold in Europe: turnover and market share. It is Volumes were up for all products in Spain, the Czech Republic and Europe (19 countries). Ricard, Larios, Pastis 51, Suze, also worth noting that France is (+ 6%). Sales of fruit drinks were Greece served to reinforce the Clan Campbell and Jameson. • 49% of the Groupe’s total activities the number one market in the IN PARTNERSHIP revitalised by the launch of the importance of the European wines The latter two are also among the achieved in Europe, made up of: world for scotch, ahead of the UK WITH FRENCH ranges Banga Dingue and Banga and spirits sector and gave the five fastest growing brands in - wines and spirits: 21% and the USA. AGRICULTURE Maxi Fruits. Groupe a new brand with poten- the world. - alcohol-free activities: 28% The French wines range is also And as for CFPO, they enjoyed tial for the whole region, Larios, Within the Europe region, In 1997 we processed: up in volume and value, due no- great success with Orangina Rouge. as well as two local brands Beche- • 49% of operating profits. Pernod Ricard is concentrating its • fruits and plants: 2.3 million tonnes, tably to the widened distribution The fruit preparations also rovka and Mini. advertising and promotional efforts • pure alcohol: 450 000 litres, in other • A three-fold organisation: of Café de Paris. contributed hugely to the healthy Our own distribution network on a few strategic products which words 50% of French production - PR Europe and its subsidiaries (the performance of this sector, all of is one of the largest in continental have an international future and (only of agricultural origin), distribution of the Groupe’s interna- which meant that our Groupe was Europe. Although the Groupe which, in 1997, in fact confirmed • packaging: 1% of French production tional brands, the production of local able to improve its positions in a remains keen to seize any oppor- this potential for development. (bottles, boxes etc.). brands), market which itself was up 5%. tunity for development which may In 1997 Clan Campbell joined arise in this region of the world - Sias-Mpa and its subsidiaries pro- Jameson as one of the fastest which represents 49% of ducing and selling fruit preparations, growing spirits in the world, as it its activities. continues to grow in almost all of - The whiskey production companies: its European markets. WINES AND SPIRITS: Irish Distillers and Campbell Distillers And Havana Club recorded BRANDS WITH (direct subsidiaries of Pernod Ricard). volumes which were up by over 40%. INTERNATIONAL POTENTIAL CONTINUE TO GROW

6 Groupe brands figure among the top 100 brands in the world, large-

THE GROUPE LEADS THE FRENCH MARKET. THE LEADING CZECH SPIRIT.

18 19 News from the regions

In Germany, Austria and Cen- FRUIT PREPARATIONS: tral Europe the Italian + 19% Ramazzotti is continuing its The growth of Sias - Mpa is con- expansion with growth in excess tinuing at the same sustained of 20%. pace all over the world. And in Thanks to the integration of Europe in 1997 the company the company Larios, the brands recorded growth in turnover of Ricard and Havana Club are re- P ERNOD H EX WIRED: A CONSPICUOUS 19%. This pace is even faster in inforcing their positions on the ENTRANCE ONTO THE BRITISH MARKET. Germany and Poland. CFP Oran- Spanish market. In return, the gin gina also recorded excellent sales Larios is beginning its break- performances in Great Britain, through into the European market. Belgium and Holland, with aver- The success of the Groupe’s age growth in turnover sitting at wines continues, particularly in 18% in the European market. Great Britain and Ireland with Finally, our distribution sector is the “new world wines” range, also continuing to expand, in Ire- especially Jacob’s Creek. land and Great Britain.

J ACOB’ S C REEK: AUSTRALIAN WINES ARE SEDUCING A GROWING NUMBER OF CON- SUMERS IN EUROPE.

THE “ANGEL’S SHARE” EVAPORATES DURING MATURATION.

THE WIDEST RANGE OF ANIS-BASED SPIRITS IN THE WORLD.

21 News from the regions The Americas: solid assets

Throughout the region the Groupe has built solid relations with its produc- tion subsidiaries in the USA, Argentina and Mexico.

ID CARD

• PR Americas (100%) Our strategic brands are pre- Among those Havana Club is - Austin Nichols, United States, sent in all our key markets. proving its real potential throu- - Nihco International, Canada, In the United States, Austin ghout the entire region, particu- - PR Mexico, Nichols produces one of the world’s larly in Mexico. Jameson and Clan - El Muco Bebidas, Venezuela, most prestigious bourbons, Wild Campbell are also present in the - Pramsur, Uruguay, Brazil Turkey, which has enjoyed steady and Paraguay, major markets. growth, since it first joined the - Cusenier saic, Argentina, In Columbia, priority was given Groupe. In the domestic Bourbon to Dubonnet, and in Argentina, - PRC Diffusion, Caribbean, market, rather sluggish in 1997, Cusenier Saic, one of Pernod - PRCD Bolivia, Equador, Austin Nichols has consolidated Columbia, Peru, Ricard’s oldest subsidiaries, has its volumes. The company is also - PR Chile, Chile. built up a large range of local pro- achieving fantastic results with • SIAS-MPA ducts such as the anis 8 Herma- the Groupe’s imported wines and - Ramsey Sias, USA, nos, Cusenier liqueurs and spirits, brands which again this - Flavors from Florida, USA, Padilla. year, are increasing in volume. - Siasport, Mexico, In the south of the continent, In export, Wild Turkey has - SiasMex, Mexico, the Groupe has developed a range been enjoying healthy growth in of wines, widely appreciated in - Sias Fruit Argentina. such markets as Australia, Japan both export and at home: Etchart and even France. The company of Argentina and Terra Andina of also produces and distributes Yoo- Chile. Hoo, a chocolate which is As for the fruit preparations incredibly popular among young market, Sias - Mpa also realises a American consumers. significant share of its activity in The Groupe is gradually intro- North America and Latin America. ducing its strategic brands into the major markets of Latin America.

22 23 News from the regions News from the regions Cuba: the birthplace of cocktails Australia: double digit growth in export

“Mojito”, “Cuba Libre”, “Piña Colada”, “Havana Loco”, “Daïquiri”, “Hava- Our Australian wines, produced using the Groupe’s own vineyards and na tonic”, all these rum-based cocktails were the fruits of the imagination of cellars, sell both in the domestic market and in export all over the world. bartenders from Havana.

A country of sugar cane and the ID CARD are then all aged in white oak ID CARD birthplace of cocktails, Cuba pro- HAVANA CLUB SINCE 1878 casks. They are filtered and then • PR Australia: duces some excellent rums, among left to rest. a full range of rums: PR Australia produces a wide - Orlando Wyndham PR Australia is also in charge the best in the world, which are Pernod Ricard was keen to have variety of still and sparkling - Two Dogs Holding of developing our brands in New now regrouped under the Havana • Silver Dry, 37°5: clear and pure, Havana Club in the Groupe because wines, most notably the Jacob’s - Orlando Wyndham Zealand. Club range. Hugely popular locally, perfect for long drinks and cocktails of its strategic brands, brands Creek, Wyndham Estate, Rich- - New Zealand. In 1997 the Groupe took these rums are now also enjoying which are now enjoying great suc- • 3 years old, 40°: lightly golden, drink mond Grove and Montrose ranges • Number 1 exporter of Australian control of the company Two Dogs, stunning success all over the world. cess in all regions of the world. it straight or in cocktails and for sparkling wines - Carring- wines. the creator of “alcopops” now Havana Club is a “Ron superior”, In Europe, growth for 1997 was in ton and Trilogy. The company also • Jacob’s Creek is the leading brand- widely distributed in Australia, made in the traditional Cuban • 5 years old, 40°: golden brown with excess of 40%. On the island of ed wine in Australia. imports the Groupe’s strategic Europe and the United States. way, that’s to say a light rum, a fine, balanced nose Cuba, the Groupe is importing brands, particularly its range of twice distilled and then matured. international brands, now present • 7 years old, 40°: a perfect after- whiskies. Young rums are brought together in all hotels, restaurants and dinner drink. with aged eaux-de-vie, and they tourist venues. News from the regions News from the regions Asia: the Groupe consolidates its positions

PR Australia’s sales in its In 1997, Australian wines The growth of the Groupe in these markets has naturally been hindered by domestic market have continued continued their seduction of the economic crisis which is shaking the entire region. Pernod Ricard is to expand in the wine sector where consumers the world over, espe- taking the opportunity to reinforce its positions. the company is the second biggest cially in the United States, Great operator in terms of volume. Britain, Asia and in those coun- In the spirits market, Wild Tur- tries where wine comsumption has ID CARD key Bourbon, Jameson Irish started only recently. And Jacob’s • PR ASIA: whiskey and Clan Campbell Scotch Creek now features among the T HE J ACOB’ S C REEK RANGE, MARKET PR Asia, a Pernod Ricard sub- - Beijing Pernod Ricard Winery, China, Despite the rather tense eco- have all enjoyed significant grow- world’s biggest selling brands of LEADER IN AUSTRALIA. sidiary, has a light presence in all producing the wines Dragon Seal and nomic environment PR Asia has th, significantly outperforming quality wine. the major Asian markets. It is an Zhong Hua Kuei Hua Chen Chiew, still managed to achieve healthy the market. area in which the Groupe is still - Dragon Seal, China, increases in volumes in those big- going through its investment phase - Casella Far East, Hong Kong, gest markets with the Jacob’s and therefore the current problems - Casella Taiwan, Creek range of wines. are not affecting the Groupe’s - Perithai, Thailand, In China, Pernod Ricard pro- results in any significant way. On - Pernod Ricard Japan, duces local wines for international the contrary, the Groupe is able to - PRK Distribution, Korea, consumption, most notably Dra- THE VERY FIRST JACOB’S CREEK VINES make the most of the situation by - Perising, Singapore, gon Seal. In Japan, the Groupe WERE PLANTED 150 YEARS AGO IN THE - PR Vietnam, BAROSSA VALLEY. taking time to expand its distribu- has preferred to build its own net- tion networks throughout our - Perindia, India, work and has taken advantage of region. - Periceyl, Sri Lanka, the bouyant market, particularly PR Asia imports all of Pernod that of the clear spirits sector, to • Sias Korea, Korea. Ricard’s strategic brands, as well increase volumes by 40%, all as Bisquit and some speci- brands included. ality drinks, such as Soho. The In India the Groupe recently Groupe also distributes some acquired a production plant which soft drinks. is still in the process of being modernised.

RENAULT AND BISQUIT, TWO COGNACS ENJOYING GREAT POPULARITY IN THE REGION.

26 SOHO: A LITCHEE-BASED LIQUEUR. 27 The stock market The stock market The Pernod Ricard share: + 23.3%

1997 was a very good year on the Paris Stock Market, as was the case for the tions, does not see fit to revise its November marks a radical majority of European markets. views on the share. Whilst the turning point in the life of the market once again falls, in keep- share in 1997. On 7th November, ing with Wall Street, which had the last day of the market before suffered a Black Friday on 15th the readjustment of the index, the August, the share proves to be session witnessed the effect of the rather resistant, a factor which “one-shot” exit of index-linked enables it to reduce the gap with funds and a strong speculative The continued fall of long-term diverting in any significant way. results in the French general elec- the CAC 40, at the same time run on the share linked to the an- interest rates, the steady rise of Despite the announcement of tions, only to bounce sharply back maintaining its poor price levels nouncement of the death of the dollar, the gathering momen- results for 1996 (19th March) on 2nd June when the Market wit- (283.5 francs on 29th August). Mr. Paul Ricard. Finally the mar- tum of the move towards Euro- which were better than expected, nessed a veritable rush on consu- In September, the share suffers ket wakes up to the fact that the pean Monetary Union, the consoli- the market remained cautious, mer and distribution shares from the consequences of the to a spate of steady retraction Pernod Ricard share is clearly dation of the economic recovery despite the low price earning ratio. within the context of a policy to announcement of its exit from the from the share. The market an- under valued and the next day throughout the year, sustained by The prospects of an increase in raise salaries and the anticipation CAC 40 (announcement made on ticipates downward pressure Pernod Ricard confirms its recov- a revival in domestic demand (in net profits at + 5% for 1997, of a possible fall in VAT rates. 23rd September, to take effect on linked to the exit of index-linked ery with an 8.1% rise. the second half of the year), the announced at the Shareholders’ There was disappointment in 12th November). Pernod Ricard, funds, the role of which is to Activity during the third quarter regular revision of company profit General Meeting on 6th May, is July when the share failed to par- largely undervalued in a food and reflect at any point the composi- highlights the improved growth growth forecasts, the ever-increas- deemed insufficient to change ticipate in the healthy upturn in agriculture sector which had been tion of the index. and is widely commented on: ing number of mergers, regroupings opinions and the general market the Stock Market with a fluctua- abandoned by the market, bore Pernod Ricard successfully wea- information meetings held in our and corporate “rapprochements” concensus remains unchanged. tion of 1.3% in a market which the brunt, together with thers the effects of the Asian cri- offices, press releases and com- as well as high number of asset As with all the other shares in was at 7.6%. Poor weather condi- , of the necessary re- sis (the Hong Kong crash on 23rd ments from analysts. The share is selling activities. All have been the food and agriculture sector, tions in June gave the market adjustment for the entry onto the October) and proves itself to be set to rise steadily at the will of accompanied by a record volumes the share seemed as though it had reason to believe that the nonalco- market of France Telecom and more resistant than the market by these various publications. of exchange, and a large number been forgotten and remains stuck holic sector was having problems. SGS Thomson. This announce- confirming its ability to bounce back The announcement of the of new introductions onto the within the 280 / 300 francs, brack- On 7th August the half year ment, for technical reasons, leads from this side of the 280 francs. planned sale of Orangina is very market, all explain the excellent et, the level at which it entered results are published. The finance well received by the market which performance in Paris. portfolio and arbitrated. community acts on the announced Volumes and share prices over 18 months applauds the transaction. The During the first three months In line with the general market, growth and comments widely on affair is heavily covered by the of the year the share followed the the share fell swiftly, following the the strong international increases Month Volumes Capital Average High Low End of number volumes price month media and the financial market CAC 40 index, without ever announcement of the first round although, with only a few excep- of shares share price (in thousands) (in FFM) (in francs) (in francs) (in francs) (in francs) approves by focusing on the stra-

09/96 2423 703 289,97 308,80 270,20 286,00 tegic aspects of the deal and on Monthly average trend Net dividend trend 10/96 2452 677 276,23 292,00 266,10 276,00 the Groupe’s new capacity to ■ Pernod Ricard ■ Pernod Ricard 11/96 2247 638 283,97 297,00 274,00 289,00 equip itself with a major tool for ●●● CAC 40 ■ Inflation (1) AAGR Pernod Ricard: 12,70% 12/96 2602 724 278,36 296,00 262,00 287,00 01/97 4294 1289 300,14 313,00 277,00 308,90 growth and to really develop its 02/97 2434 748 307,22 319,80 297,50 311,00 03/97 2607 829 317,82 334,50 302,00 315,70 brands. Most of the analysts alter 04/97 2626 794 302,58 314,00 287,00 299,90 their recommendations and now 05/97 3770 1138 301,77 309,00 271,50 275,50 06/97 3478 1049 301,73 315,00 268,20 303,00 recognise that the share has the 07/97 2350 726 309,15 319,80 296,00 307,00 08/97 2030 613 301,97 320,80 283,00 283,50 potential to hit 400 francs. 09/97 2382 704 295,71 313,80 284,10 296,00 The share, with high trading 10/97 2499 711 284,47 298,00 237,00 267,30 11/97 4168 1211 290,44 309,00 255,30 300,00 volumes, continues its rise into 12/97 4158 1379 331,75 365,00 299,10 354,00 the first quarter of 1998 and on 01/98 3050 1149 376,57 394,00 350,00 392,00 02/98 2252 865 384,23 398,00 368,50 398,00 31st March closes at 421 francs. 03/98 3852 1623 421,40 465,00 395,10 421,00

(1) Annual Average Growth Rate 28 29 Human resources 1997 Human resources 1997 A confirmed trend towards internationalisation

On 31st December 1997 Groupe Pernod Ricard employed 12 652 people PAY* can highlight particular training ABSENTEEISM (Vs. 11 614 in 1996, marking an increase of 8.94%), of whom 8 089 work programmes carried out at Irish AND ACCIDENTS In 1997, the average annual salary abroad, that is 64% of the workforce (Vs. 62% in 1996). Distillers with the “Beyond 2000” AT WORK: A YEAR increase in France was 2%. This project and in the UK, at Camp- OF CONTRASTS increase should be viewed in the bell Distillers, where a number of context of two exceptional factors If the rate of frequency (29.28) is employees took part in a course on this year, resulting from the up within the Groupe compared to methods of evaluation and job des- implementation of the Loi Robien: 1996 then, in contrast, the level of cription, run in collaboration with Throughout 1997, we note on IN / OUT (the Loi Robien), which as a on one hand the freezing of gene- severity (0.48) is down. Thus Hay consultants. It is worth noting one hand an increase in the num- consequence led to 10% increase ral increases in a large number of there were more accidents in In 1997, 1975 recruitments were that all job categories benefit ber of French employees (+ 4.5% in employee recruitment. the French subsidiaries and on 1997, but they were less serious. made outside of the Groupe, all on equally from training investment. in 1997 against a fall of -2.2% in the other hand the recruitment of Overall, these two figures fit permanent contracts, as opposed AVERAGE AGE AND 1996), and on the other hand the personnel who are paid on a 35- within a downward trend which to 1406 in 1996. Amongst these LENGTH OF SERVICE* Profit sharing and employee share integration of some new foreign hour week basis. started at the beginning of the 90s. 433 were made in France (as oppo- participation schemes 1996 1997 subsidiaries within our perimeter In 1997 the average age of Groupe Profit sharing 55 678 784 49 885 991 Rates of sickness leave are down, sed to 218 in 1996). In fact, in TRAINING of consolidation: Epom (Greece), personnel was 38 years and 4 % of total salaries 6.39 5.87 as are levels of maternity leave. 1997 the majority of our French Share participation 58 212 982 68 503 459 Larios (Spain), Nihco (Canada), months, lower than that of 1996 Levels of training have remained subsidiaries signed agreements % of total salaries 6.68 7.88 PROFIT SHARING AND PR Mexico, El Muco Bebidas which was 39 years and 5 months. stable for the whole Groupe (2.07% concerning work scheduling and EMPLOYEE SHARE PARTI- (Venezuela), Pramsur (Uruguay), This change in the average age of the total payroll). We note an Frequency the reduction of working hours (Number of accidents with leave / 1 000 000 CIPATION SCHEMES IN THE PR Colombie, Two Dogs (Austra- can be explained on one hand by the increase in training within the hours worked) FRENCH SUBSIDIARIES lia), PR Trinidad, Appleby-BWG recruitment of young employees French subsidiaries (3.28% in (Great Britain). by all the subsidiaries and on the 1997 as opposed to 3.18% in 1996). For 1997, the number of share The breakdown by category Geographical breakdown other hand by the integration into This percentage, which is higher participation schemes increased ■ France ■ Europe, excluding France remains stable, taking into consi- our definition of consolidated com- than the obligatory minimum, by 17.68%, ■ The Americas ■ Asia ■ Australia deration the removal this year of panies of subsidiaries whose work- reflects the Groupe’s keenness to whilst the level of profit sha- the “sales personnel” category, forces are generally younger fulfill everybody’s potential, in ring fell by 10.40%. now divided between employees (especially outside of Europe). terms of in-house training (with The joint total of participation / and the technicians/line supervi- A disparity exists between the the Pernod Ricard Training Severity profit sharing schemes climbed sors. The gender split also French subsidiaries where the Centre) as well as external. (Number of days lost / 1 000 hours worked) from 113 891 766 francs in 1996 remains stable with 66.5% of men average age is 40 years and 4 As for the subsidiaries abroad, to 118 389 450 francs in 1997, and 33.5% of women in 1997. months and the foreign subsidia- levels of training remain clearly marking an increase of + 4%. ries where the average age is 37 much lower (1.29% of the total CONTRACTS years and 10 months for the other payroll for Europe and 0.53% for Short-term contracts on 31st Breakdown by category European subsidiaries and 36 the rest of the world). However we December 1997 represented 9.3% ■ Workers ■ Employees years for the rest of the world. Breakdown by department Age breakdown ■ 1995 ■ 1996 ■ 1997 of the overall workforce (as oppo- ■ Tech. LS ■ Management Average length of service is also

sed to 7% in 1996). This type of down from 11 years and 9 months 500 40 contract is becoming more popular in 1996 to 10 years and 2 months 35 400 abroad, particularly outside of in 1997. 30 300 25 Europe (20.5% of contracts), a fact Overall the Groupe’s age profile 20 which can be largely explained by is well balanced. The integration 200 15 seasonal work. In France, short- of the new subsidiaries made up of 10 100 5 term contracts have totalled 3.2% relatively young workforces com- Production Distribution R & D Sales and Sales Head office of all contracts. pensates for the ageing of the 20 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 and logistics Administration older subsidiaries.

30 31 * NB: only permanent contracts are analysed. *NB: only the salaries of the French subsidiaries are analysed. Human resources 1997 The reduction in working hours

Groupe Pernod Ricard’s French subsidiaries are working together in the fight against unemployment.

Since the foundation of Groupe companies CSR-Pampryl, Cuse- staff around this scheme of redu- Pernod Ricard, each and every nier, Orangina, Pernod and cing working hours, a scheme subsidiary has been concerned Ricard, by reducing their work which, depending on the various with the well-being of its time by 10%, created a total of 377 companies, aims to bring fresh employees and with its role as a jobs, 259 of these recruitments life to the social dialogue, to crea- player in the economic life of the having been made before 31st te a common identity, to offer new country. December 1997. schedules to the customers and to It was in this spirit that in These new jobs have largely adapt the workload and produc- France in 1997, our human been made within commercial tion schedules to the seasonality resources activities were marked positions, enabling the companies of sales. by the signing of agreements involved to reinforce their sales A new organisation has been concerning the Scheduling and force, thus gaining a greater pre- implemented at the cost of certain Reduction of Working Time, sence in the field. This wave of financial sacrifices, in the form of within the context of the law of relatively young new recruits has salary reductions, and the free- 11th June 1996, the so-called Loi also helped to “rejuvenate” the zing or capping of increases, Robien. age profile of Groupe employees in aspects which concern all The introduction of these France. employees, from staff on the pro- agreements gave Pernod Ricard As far as production is concerned, duction line right through to the opportunity to illustrate its the reduction in working hours management, including the subsi- desire to contribute to the fight has been made possible by the diary Chairman. And moreover, against unemployment. introduction of annualisation this application of the Loi Robien, The practicalities of the Loi agreements which have inturn by providing more free time, has Robien, in a bid to create jobs, generated gains in productivity. certainly contributed to the perso- involved 5 of the 6 French subsi- The subsidiaries have therefore nal fulfillment of those employees diaries of the Groupe. Thus the succeeded in motivating all their concerned.

SHARING EXPERIENCES - OUR TRUE WHEALTH LIES WITH OUR PEOPLE.

32