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Regal eye – interview with Pernod Ricard’s Christian Porta

By Ian Fraser

Sunday Herald

May 9th, 2004

CHRISTIAN Porta, a 41-year-old Frenchman, has to partake in some curious customs in the name of Scotch whisky. At the Keepers of the Quaich dinner at Blair Castle last month, a magnet for people involved in the Scotch whisky industry from round the world, the Chivas Brothers chief executive was inducted as an honorary keeper. Like all the guests he also ended up standing on his chair as the Earl of Elgin, one of the keeper’s office bearers, sang his own rendition of “Scotland yet”.

The Keepers was founded in 1988 with a mission to restore the status of whisky and honour those involved in making and marketing the drink around the world. However the organisation’s quirky and somewhat anachronistic image does seem rather at odds with the refreshing and clean modern image that Porta seems determined to bestow on his company’s Chivas brand around the world.

Porta, born in Strasbourg, Alsace, took over as chief executive of Pernod Ricard’s Scotch whisky operation when the retiring Georges Nectoux stepped down in January 2004. He started his career with accountants Arthur Andersen in Paris. He then plumped for a career in the drinks business – partly, he says, because unlike widget-making it is so close to consumers.

He has spent the past 10 years in a range of roles within the Paris-based Pernod Ricard group and in 1999 was relocated to Sydney with his wife and two young sons to take charge of the Orlando Wyndham wine business, the maker of Jacob’s Creek.

Porta believes one of the biggest challenges facing the whisky industry is to rejuvenate Scotch’s image in critical markets such as the United States and UK. “The main challenge for me is to make whisky fashionable again.

“This is a problem the whole of the industry faces, especially in markets such as the UK or US. The Scotch whisky industry has not done enough over the last 40 years in terms of recruiting younger people – so there is probably, in the UK and the US, a generation that has missed the whisky trend who are more used to drinking vodka, tequila or liqueurs. It can be done. We’ve managed to do it in Spain, France and Greece.”

Chivas Regal, the luxury blended Scotch whisky, which came into Pernod Ricard’s drinks cabinet when it was acquired from Seagram as part of a £2 billion deal in late 2000, has already been given its makeover.

Porta says the company’s number one priority following that transaction – which also brought Royal Salute, The Glenlivet, Glen Grant, 100 Pipers and Something Special – was to rejuvenate the Chivas Regal brand. Company insiders admit it had been somewhat neglected by Seagram/Vivendi or perhaps used as something of a “cash cow” under the previous management.

The brand had been synonymous with luxury Scotch and metropolitan chic in American bars in the 1960s and 1970s, when people would apparently ask not for “Scotch on the rocks” but for “Chivas on the rocks”. However, through neglect, it was beginning to become just a little tarnished in some consumers’ minds and had been losing sales to arch-rival Johnnie Walker Black Label, owned by Diageo, for about a decade.

Porta is diplomatic about Chivas’s previous owners: “We don’t want to spend too much time criticising our predecessors, but in a number of markets it was more fun for the Seagram teams to sell Absolut Vodka or Captain Morgan rum than Chivas Regal. For us, however, it is much more of a priority – the time, energy and resources we get from our sister companies [the Pernod Ricard distribution network] is tremendously superior to what was allocated before.”

This is the Chivas LigeHaving introduced subtly revised packaging in March, Porta said Chivas Brothers is this year pumping 45m euros into advertising the brand in 40 different countries around the world, using a new campaign developed by advertising agency TBWA Paris. First aired in September 2003, this uses the catchline “This is the Chivas Life”.

The hope is this will rejuvenate the Chivas brand and persuade existing drinkers to crack open a bottle more often. It features moments of shared enjoyment intended to appeal to younger drinkers (though Porta stresses they are still aged 30 or more). Scenarios include travelling without a destination in mind, sailing a yacht and ice-fishing in Alaska.

“The objective of it is to attract younger people, rejuvenate the brand and increase Chivas’s approachability. Depicting Chivas as the drink to enjoy with friends means the campaign is quite flexible and versatile. This means you can vary the content in specific markets and have a common theme which is the Chivas Life. We’re significantly ahead of what Seagram did at least in the last five years.”

The results seem encouraging. Last year Chivas Regal’s volume sales grew by 7% to 2.9m cases, which has been keeping the group’s Paisley bottling hall staff busy.

Porta says: “That is a good performance considering that in 2003 we had war in Iraq and Sars in Asia. It’s the first year in a number of years that Chivas Regal shows a change in the trend. It had been in decline for a number of years, by about 1%-3% per year since the mid-1990s. The early signs show that with the new campaign and the new packaging we have reversed its decline.”

Last year, Porta says Chivas performed particularly well in Chinese bars and other licensed premises. “In any nightclub, bar or young people’s venue in China, you will see groups of young people with a bottle of Chivas on the table. They share it and they mix it with soda water, green tea, whatever.”

However, last week Pernod Ricard announced a 1.2% dip in wine and spirit sales to euros 704 million for the first quarter of 2004, a dissappointment the company largely blamed on currency movements.

Porta, who recently became an Arsenal fan and spends most Saturdays watching his two sons get muddy on a football field, says Chivas Regal is now the number one imported spirit in China. But success has brought the problem of counterfeiting.

“Of course, counterfeiters are trying to ride that wave – we are working with the Chinese authorities to try to limit that: they organise raids of restaurants and bars or off-trade outlets.”

Asked what steps Chivas Brothers is taking to defeat the counterfeiters, Porta says: “We have a few devices, but I won’t give you the details because we don’t want the counterfeiters to read the article.”

Now that Chivas Regal is back on a path to growth, Porta will be turning his attention to updating some of the other brands in his portfolio, with malts such as The Glenlivet, Aberlour and Glen Grant likely to take priority. He will also address Royal Salute, a 21-year-old blended whisky introduced to celebrate the Queen’s coronation in 1952, and which is a big-seller in Asia.

Only when these brands have had the Porta treatment will he turn his attention to and the so-called “heritage malts” Longmorn and Strathisla. These are currently barely marketed but Porta says one possibility is to adopt an approach along the lines of what Diageo has done with its classic malts.

What about the two recent controversies to have dogged the Scotch whisky industry in recent days: the Cardhu “Pure” Malt debacle, which was resolved in February when Diageo voluntarily withdrew the offending product? And what about Chancellor Gordon Brown’s attempt to clamp down on fraud in the UK market with the introduction of so- called strip stamps?

Porta believes the government has quite simply got its figures wrong. “The fraud figure [produced by the government] is far from the reality. And anyway strip stamps are not the right way to combat fraud – if people are capable of forging passports, then they could easily forge a strip stamp. The US had strip stamps until the middle of the 1980s and they withdrew then because they were not working.”

On Cardhu, Porta says: “We believe the SWA has handled this issue very well and the outcome, however it was achieved, was a very good outcome for the industry. Cardhu is again a single malt and that is what matters at the end of the day. A single malt is a very important ‘appellation’ for the Scotch whisky industry and we are happy to see this appellation has been protected.”

With this issue behind him, Porta says he was encouraged by the recent export figures from the SWA which showed overall exports of Scotch rose to £2.37bn in 2003. “This was the second-highest overall export figure for the industry, after 1997. There are plenty of opportunities in China, India and Eastern Europe. The taste for whisky is a taste is very well accepted around the world.”

As Porta focuses on the top end of the market, he is also likely to sell off several more former Seagram and Pernod Ricard assets.

Last week, the company sold its mothballed Benriach distillery to former Burn Stewart director Billy Walker and South African investors. This was mothballed by Pernod Ricard along with three other distilleries that came with the Seagram transaction – Allt a’Bhainne, Braeval and Caperdonich.

It also owns Glen Keith which was mothballed by Seagram in 1999. Edradour, near Pitlochry, was sold to entrepreneur Andrew Symington for a reported £5.4 million in 2002.

Porta says: “All of these distilleries, if you needed them in the future, could be reopened. If there is a good offer, we can sell one of them.” But he adds: “It is really important for us to grow our volume so they may be needed anyway – altogether we are close to 10m cases of Scotch whisky.”

Porta says that mass-market blended whisky brands such as 100 Pipers and Clan Campbell are “non-core”, which is usually industry shorthand for available should someone offer the right price.

Mini profile
Name
: Christian Porta
Born: Strasbourg, 1963
CEO of Pernod Ricard’s Scotch whisky arm, Chivas Brothers, he previously ran Pernod’s Australian wine business, Orlando Wyndham.
He lives in London with his wife and two young sons.

Copyright 2004 SMG Sunday Newspapers Ltd.

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