In 2023, Pernod Ricard made headlines by selling its wine business to Australian Wine Holdco Limited (AWL), a move that included the well-known entry-level brand Jacob’s Creek. Pernod Ricard used this strategic decision to increase its focus on premium brands, especially in the worlds of champagne and spirits. The transaction includes the sale of a wide portfolio of strongly established international wine brands owned and produced by Pernod Ricard Winemakers, with over 10 million 9Lcs cases annually from three origins including Jacob’s Creek, Orlando and St Hugo from Australia, Stoneleigh, Brancott Estate and Church Road from New Zealand and Campo Viejo, Ysios, Tarsus and Azpilicueta from Spain.
Treasury Wine Estates in Australia is also making a similar shift. They are dropping their entry level brands, such as Wolf Blass to focus on their premium offerings. Penfolds is leading the way.
Why? The answer lies in the numbers — and the challenges. The margins on entry-level wine are razor thin, despite the fact that it has been a long-standing volume game. The global wine market is in decline and has reached its lowest point for 27 years. Once a hotbed for wine in China, the market has shrunk significantly. The young generation’s attention and tastes are divided. Production costs are increasing, further reducing margins.
The supply side of the equation is also shifting. Global wine production now tends to be on the decline. This is a result of economic recalibrations after periods of excess production, as well as the increasingly unpredictable weather. In France, this situation is so dire that it has led to the decision to uproot some vines.
This combination of factors is driving the industry to recalibrate, with major players pushing towards the premium end of the market, where higher margins can be sustained — assuming, of course, the brand strength is there to support it.
What will this mean for the smaller producers of fantastic wines, as the giants consolidate positions? In an increasingly competitive environment, it is hoped that the small producers who are making fantastic wines will continue to thrive.
Wine is a more than just a beverage; it is an important cultural element. It is a vital thread in the complex web of social interactions. It has always connected cultures, generations, as well as hearts. As the wine industry continues to evolve, it is important that we continue to value, share, and make wine accessible for everyone.
Ludovic Tendron’s Biography
In 1998, when I began my career as an attorney with Hewlett Packard Inc., I realized that my passion lay within the dynamic worlds and hospitality. I joined the Accor family in 2000. I spent 14 years honing my skills in hotel development, asset-management, legal issues, and forming valuable brand partnerships. I have gained a deep understanding of the industry through this journey.
I founded my consulting firm, Ludovic, in 2014. We provide strategic advice to the global hospitality, lifestyle, and luxury sectors. My work encompasses, among other things, the negotiation of pivotal hotel contracts, crafting of valuable partnerships, sourcing of projects, distributors and investors, M&A, and hospitality events.
Vitisasia was launched in Singapore in 2011 after I realised the importance of memorable gastronomic events. By hosting exclusive dinners with celebrity chefs, top producers of wine, luxury brands and media, my ability to anticipate and pay attention to details has been refined. These events are not only a great way to enhance guest experiences, but also a way to develop a network of people and gain a broader understanding of the luxury industry and hospitality.
Negotiation is at the heart of my activities, a skill I have mastered over the years, culminating in the publication of my book, “The Master Key: Unlock Your Influence & Succeed in Negotiation,” and the launch of my podcast, “CEO Insights.” I offer bespoke negotiation training and groundbreaking speaking engagements to clients and their executives, empowering them with the tools to succeed at negotiating.
I was inspired by historical figures, who used wine and food as an influencer, so I seamlessly integrated culinary experience into my negotiation techniques, using them to achieve impressive results.
I am passionate about food, enjoy entertaining and creating memorable experiences. I am a wine collector and lover. Wine Legends was a fund I created and managed from 2011 to 2018. It focused on fine wine acquisition and investing. This experience has deepened my knowledge of the wine industry, and its potential to be an asset class.
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