16 Apr
2004
Porta's challenge of the Chivas Life
CHRISTIAN Porta knows full well the size of the job ahead of him - to rejuvenate and grow sales of some of Scotland’s most recognisable and successful products, without diluting any of their traditional image and appeal. At the same time, he must fight his corner in possibly the most competitive sector of the drinks industry amid growing government interference in the way the products are sold.

There lies the challenge of running Chivas Brothers - the venerable Scotch whisky house now owned by Pernod Ricard - which controls a stable of top brand names, but which some analysts argue have been starting to cry out for a modern facelift.

Chairman and chief executive of Chivas for the past three months, Porta is no stranger to the industry and is under no illusion about the scale of the job and its sensitivities.

It is two years since the £5.7 billion carve up of Seagrams, which catapulted the French drinks giant into being Scotland’s third-largest whisky group behind Diageo and Allied Domecq, after it bought the Chivas stable for £2.2bn.

He refuses to criticise what went on in the past - "one has to be very careful when we are talking about previous ownership" - but simply says that things are going to change now he’s in control. "Scotch whisky is very important, I would say it now comes above everything else in our portfolio," he says.

Pernod now holds £2.14bn-worth of whisky brands and an 11 per cent market share. As well as Chivas Regal, it bought single malts Glenlivet, Glen Grant, Glen Keith, Longmorn, Strathisla and Benriach, all owned by Chivas Brothers. It also took over the 100 Pipers blend, plus the export market whisky Something Special, which it added to its three existing brands - Clan Campbell, Aberlour and Edradour.

For Porta, who hails from Strasbourg but who has already cut his teeth in the whisky industry as managing director of Campbell Distillers, the challenge of running Pernod’s Scotch whisky business has come at an opportune time.

"The Chivas Regal brand was declining in the late nineties," he says. "Our mission is to get it back to where it should be - a leading producer in the Scotch whisky market."

One of the ways he plans to do this is by hitting the market with a £28 million marketing drive, "revitalising the brand", which aims to push sales to four million cases from 2.9 million by 2007.

The company’s advertising agency, TBWA, has created five press adverts and two TV commercials under the catchline "The Chivas Life", which will focus on Pernod’s target markets - the US, Japan, Spain, France, Italy, Mexico and China.

Porta says the new look will be "fresher, more eye-catching", putting huge emphasis on the brand’s rich heritage.

He is also hoping that drive will help sales in the Glenlivet, which grew by 7 per cent last year to just under 400,000 cases a year, at the expense of the industry leader, William Grant’s Glenfiddich, which sells more than 775,000 cases.

"There is no doubt the Glenlivet is a brand that is growing, but we also have big ambitions for it," he says.

"It has performed very well in the US, but it doesn’t have a strong position in Europe. Because of our European heritage, this is a priority and we are working towards an accelerated development plan for the Glenlivet across the continent."

The 41-year-old Frenchman, who studied at business school in Paris before joining Pernod as an internal auditor to become head of financial services and later finance director, sees Europe as his obvious priority, but also plans a hard push into Asia.

"That is becoming increasingly important, in particular Japan, Korea and China where there is a growing trend towards single malt - there is clearly growth potential."

Porta has an excellent pedigree for the job. Until last year, he ran Orlando Wyndham, Pernod’s Australian wine business. Similar in size to Chivas, it was also one of that country’s most successful wine brand exporters, selling 30 million bottles of Jacob’s Creek to Britons every year.

At Wyndham, he was also responsible for the group’s spirits marketing activity and for growing high street sales of Jacob’s Creek and Wyndham Estate wines - an experience he believes put him in fine stead for the Chivas job.

"The wine industry is not vastly different to the spirits industry. Like Chivas, I was responsible for the full operational cycle from production through to the international marketing of some of the world’s most high-profile brands. So there are lots of experiences and commonality between the two industries."

However, whatever he learned from the wine industry could not prepare him for the Chancellor’s shock decision to introduce strip stamps in an effort to counter growing fraud in the spirits industry.

It was a decision, that the normally unflappable Porta admits, left him stunned.

"It was a shock because two years ago there was an emphatic statement from the Chancellor’s team that this was wrong."

Like many of his industry peers, Porta trots out all the arguments, that it is a hugely damaging and retrograde step for the industry. He gives the example of America, where they did have strip stamps but abandoned them in the mid-Eighties, after finding that they have a negligible value in showing evidence of compliance with the law and payment of excise taxes.

But, like the Scotch Whisky Association, he does not offer any solution except for continued discussion with the Treasury - but, interestingly, he particularly echoes William Grant’s fears, that the aesthetic value of the product will be diminished by strip stamps. "We spend a lot of money on packaging and design for a product we market as a prestige luxury item. If you put some ugly, white strip stamp on it, it will damage its appearance."

Porta will not be drawn into speculation that the drinks industry has reached a point where consolidation is imminent.

With Diageo more than four times the size of second-placed Allied Domecq, the industry rumour mill has been rife with speculation that Pernod is eyeing up Bacardi, merging with Allied Domecq or even acquiring Brown-Foreman.

"At the moment, we have plenty to do within Chivas we are all focusing on that," he said.

Article Courtesy of The Scotsman
scotsman.com