The big news on the international spirits scene today is that the country of Sweden has sold state-owned Absolut Vodka to French conglomérat de boisson Pernod Ricard for $8.9 billion after a competitive auction. From Reuters:
Pernod beat the favourite, Jim Beam bourbon maker Fortune Brands (FO.N: Quote, Profile, Research), to win control of Sweden’s Vin & Sprit VSG.UL, owner of the fast-growing Absolut brand, and gain a bigger presence in the U.S.
According to Reuters and other news outlets, the final price paid by the French company was enough to make some stakeholders nervous.
“The combination of a full price and the amount of debt to be raised definitely seems to have unnerved certain investors,” said Stephen Surpless, senior analyst at Cantor Fitzgerald.
But he should chill out. Vodka is the hot ticket right now in all sorts of markets.
According to a report earlier this month, the three most popular drinks in the United States are martinis (with vodka or gin), mojitos and Red Bull with vodka. The New York Times just ran a big feature on feminine-oriented vodkas in Russia, which might work for Absolut, with its mastery of marketing and its wide variety of infused flavors.
For its part, Pernod Ricard expressed confidence in its new brand’s market strength. From its press release:
In the United States, Absolut is the top premium spirits brand, selling more than 5 million 9 litre cases. It has a unique brand image built around values of creativity, innovation and cultural leadership.
In the rest of the world, with close to 6 million cases sold in 2007, Absolut is one of the most global brands in the industry with a significant presence in all the continents and a strong perception as a leader in the premium vodka category.
So basically they picked up a very expensive and very good brand. Kind of like ordering a top-shelf cocktail. Now Pernod had better hope that the drinking public orders enough of those premium drinks to keep its new ship afloat. We’ll try to do our part, guys.