Integrated Annual Report SERIOUSLY FY19 CONVIVIAL Build passion. Accelerate growth. Transform convivialité. Raw, authentic, spontaneous. A strong aesthetic sensibility imbued with memories of his time living in the Amazon rainforest guided photographer Stéphane Lavoué in his nine double portraits of Pernod Ricard employees for our tenth artistic campaign. seriously convivial CarteB lanche to Stéphane Lavoué “I felt the need to create a personal universe. This Carte Blanche, which took me on a journey around the world, gave me the unique opportunity to transform a series of portraits into a personal photographic story. I admit that I was totally swept up by the magic of the encounters between people, generating a power that comes from the meeting of worlds that were often diametrically opposed. Everything separates them, and yet something special emerged in these encounters.” This year, Pernod Ricard gave Carte Blanche to the French photographer Stéphane Lavoué. visit our website to find out more To discover more content, scan the QR codes found throughout this Report. The information can be accessed by pointing your smartphone camera directly at the QR code. SERIOUSLY CONVIVIAL Build passion. Accelerate growth. Transform convivialité. Building today the Pernod Ricard of the future. Making convivialité the springboard of our transformation to be more efficient, faster and agile. seriously convivial A voyage in convivialité P. 6 Message from Alexandre Ricard P. 8 chapter 1 chapter 3 OUR GROUP OUR STRATEGY Transforming for Focusing on accelerated growth four key battlegrounds for sustainable growth Our history, a social & P. 12 entrepreneurial adventure P. 56 Our challenge: to transform Our decentralised organisation P. 14 and accelerate our business The Pernod Ricard Mindset: P. 16 P. 57 Winning in key markets transforming for acceleration P. 61 Building passion brands Our dynamic portfolio P. 20 P. 68 management to meet consumer Funding the journey needs & expectations P. 76 Valuing our people Our strategy: P. 24 “Transform & Accelerate” Bringing P. 26 “Good Times from a Good Place” Our community of inspirational P. 28 sustainability & responsibility leaders Our Board of Directors P. 32 Our Executive Board & P. 34 Executive Committee Our value creation model P. 38 chapter 4 2/("6Ɉ++ &)h+,+aɈ++ &)Ɉ$2/"0 P. 42 OUR PERFORMANCE Accelerating for strengthened results P. 84 Interview with Hélène de Tissot, EVP Finance, IT & Operations P. 85 Our performance indicators P. 88 Our markets P. 94 Our brands: innovating in a changing world chapter 2 P. 116 "/+,!& /!&+1%"Ɉ++ &)*/("10 OUR ENVIRONMENT Seizing opportunities in a rapidly evolving environment Major trends P. 46 transforming our sector Mapping moments of conviviality P. 48 Knowing our risks P. 52 to better manage them a voyage in convivialité A voyage in oc nvivialité New York (united states) Ruzanna Hovhannisyan Administrative Assistant Pernod Ricard Armenia P. 22 HAVANa (Cuba) Alexander DiBiase Production Supervisor Corby (Canada) P. 18 NuquÍ (Colombia) Astrid Froment New Business Acceleration Leader Pernod Ricard Headquarters P. 50 0 2,000 6 seriously convivial As ‘convivialité’ is a profoundly universal and inclusive value, nine of our employees travelled to nine different countries to meet nine iconic figures who embody the local communities and their cultures. Ísafjörður (Iceland) Jorge Garcia Commercial Operation Manager Pernod Ricard Mexico P. 80 Dingle (Ireland) Sahil Soni Marketing Manager Pernod Ricard India Lugu Lake (china) P. 74 Olusola Banjoko Trade Marketing Executive Seborga (Italy) Ian Logan Pernod Ricard Nigeria P. 30 Whisky Brand Ambassador Chivas Brothers P. 36 Groix (France) Justine Chen Tokyo (japan) Hanna Hall Communications Coordinator Industrial Pernod Ricard China Engineering Manager P. 40 The Absolut Company P. 66 7 message from the chairman and chief executive officer Our purpose To create the conditions for sustainable growth that reespect our environment and our communities and are collectively profitable for all our stakeholders. uilding for the Long Term was the It is my sincere belief that profit and purpose are not at title of the book written in 2005 by odds – in fact they go hand-in-hand. Achieving its pur- my uncle Patrick Ricard on the pose is the best way for a company to create the most 30th anniversary of our Group’s value – value that is more stable and more robust, as it creation. A visionary declaration is to the advantage of all stakeholders. Shareholders who or a subject already relevant choose to take a long-term view are the primary, but 15 years ago, I followed in his foot- not the only, beneficiaries of lasting value. By definition, steps by writing the following message to our em- achieving purpose means taking a long-term view: it Bployees on 18 December 2018: “Our core purpose is requires creating the conditions for healthy growth built to work together to create on sustainable fundamen- the conditions for sustain- tals, the performance of able growth – growth that which is measured not solely respects our environment by financial criteria, but also and our communities and by social and environmental is collectively profitable standards. The prevailing for all our stakeholders: trend is no longer a strictly employees, shareholders, economic definition of cor- customers, consumers porate performance, but one and citizens.” of sharing and passing on heritage. This may explain So how gratifying it was to why companies where there see this ethos promoted in has been, and remains, a sig- a recent statement signed nificant family investment by the heads of 200 of perform better over the long America’s largest firms term, as confirmed in The including Amazon’s Jeff Family Business Model by the Bezos, Apple’s Tim Cook, Credit Suisse Research Insti- JPMorgan Chase’s tute. According to this study, Jamie Dimon, Boeing’s over the last nine years, fam- Dennis Muilenburg and ily-owned firms outper- General Motor’s Mary ALEXANDRE RICARD formed the benchmark index Barra. In a mission CHAIRMAN AND by 47%. CHIEF EXECUTIVE OFFICER statement published on 19 August, they all declared, For Pernod Ricard, these val- “Each of our stakeholders is essential. We commit ues are not new, as evidenced by the creation of our to deliver value to all of them, for the future success Oceanographic Institute in 1966. Neither did the Group of our companies, our communities and our suddenly define its purpose in response to the recent country.” A virtuous circle that reflects the words French Action Plan for Business Growth and Transfor- of BlackRock’s Larry Fink, another of the mation. For us, the term we use has always been ‘vision’ statement’s signatories: “Purpose is not the sole and ours has long been summed up by three words – pursuit of profits, but the animating force for Créateurs de convivialité. Our entire strategy, business achieving them.” model and organisation are driven by this mission. 8 seriously convivial Being ‘creators of conviviality’ means bringing people tity. Being ‘long-term’ doesn’t mean taking our time together in moments of sharing and celebration, oc- or avoiding change. On the contrary, change allows casions that are authentic and sincere, simple and us not just to go the distance, but to accelerate to generous, sources of joy and togetherness. By fulfilling achieve our ambition more quickly. This is what this vision, we at Pernod Ricard will ultimately achieve motivates us every day. It’s a question of method, of our ambition of leadership. If we ensure that our priorities and of mindset. brands are at the centre of each social interaction, we will become the industry leader. Pernod Ricard boasts amazing talent, producing and distributing a peerless portfolio of brands around the Fulfilling our vision also world, from China and India means ensuring positive re- to the United States and turns for as many people as Global Travel Retail, our four possible. In essence, conviv- “In essence, ‘must-win’ markets. I am iality is social. It flourishes in convinced that today we are an environment of sharing conviviality the best placed in our sector and of respect for one’s host, to capture future growth. their culture and environ- is social. What better proof than the ment. Conviviality doesn’t results of our recent employ- tolerate excess. It is meas- It flourishes in a ee survey in which our em- ured, open-minded and be- ployees, voiced their confi- nevolent. This is the philoso- spirit of sharing, dence in the future? Their phy that underpins our new commitment is demonstrat- Sustainability & Responsibil- of respect ed in our exceptionally high ity roadmap to 2030, Good level of employee engage- Times from a Good Place, for one’s host, ment and the record sub- which we launched this scription rate for our first spring. This roadmap is cen- for their culture and employee stock ownership tral to our three-year busi- plan. ness strategy Transform & Accelerate, with planned in- Finally, a long-term vision is vestment of hundreds of mil- environment " also a mitigating factor lions of euros over the next against cyclical volatility in decade. periods of macroeconomic uncertainty. Strategy with a Transform & Accelerate is the result of the joint efforts sense of purpose is the best way to create value even in of 1,000 employees who worked tirelessly from Jan- downturns, as it looks beyond the current cycle. We uary to June 2018 to define it. In its first year, the plan have always had clarity of purpose. Our focus today is has achieved excellent results – the best since 2012 – on speed of action. which I won’t dwell on as they are detailed in the fol- lowing pages. My aim here is to put this strategy into a broader perspective. It is a story in which we contin- ue to evolve and adapt without ever losing our iden- Happy reading.