Pierre-Yves Calloc’h is not far off his 20th anniversary with Pernod Ricard. His first job with the group couldn’t have been more prescient for what he does today: Late 2003 saw him join the Ricard business in France as director of IT.
Fast forward to 2017 and following a handful of postings abroad, including as MD of Colombia, then of Colombia and Venezuela combined, Calloc’h returned to France to assume the position of global digital acceleration director – a precursor to moving up to become the group’s first chief digital officer in May 2020, just after COVID-19 hit at its hardest.
Global Drinks Intel: What does a chief digital officer do?
Pernod Ricard chief digital officer Pierre-Yves Calloc’h: There are really two parts to the role: The first is to leverage data and artificial intelligence to make better business decisions, the second is to develop new digital businesses.
GDI: What’s the split of your time between these two priorities?
PYC: It’s probably 60% on improving the efficiency of our core business – that includes marketing efficiencies and the segmentation of – and response to – consumer demand.
The remaining 40% is for the new businesses. That’s probably a slight over-investment of time and effort, but these types of innovation need that investment at the beginning: Hopefully, they’ll deliver higher results in the longer term.
GDI: How do you feel spirits brand owners were doing on the e-commerce front, pre-pandemic?
PYC: There have been two very different paces to e-commerce; one for wine and the other for spirits. Wine is much more developed and is about twice the size of spirits in the channel. In both, though, I think e-commerce had been approached with less interest than other FMCG industries.
We’ve seen the development of a number of direct-to-consumer businesses, but the main priority has been to be present in markets, particularly China, South America, the US – due to its three-tier system – and on retailers’ websites. The most recent development has been on-demand delivery, which has happened quite quickly. It’s not necessarily a profitable business area yet, but it’s a really convenient channel.
So, it’s a diversified area that needs to be addressed differently, by player and by country: The landscape is super-different. The companies in our industry have had similar ways of addressing them; selecting the right players for their portfolio and making sure there is the right visibility and promotions. There’s been a test & learn approach from everybody to play with the different actors.
GDI: To what level can you as group chief digital officer go before market differences appear?
PYC: There are common elements. At the group level, we provide guidelines about the strategy, but then that needs to be applied by each market: After all, the product is sold in a local language, through a local route-to-market. There are very few global players; even Amazon is a country-by-country player. Besides, cross-border shipping is super-complex.
So, we define the guidelines around which brands and what advertising is employed on which platforms. These are based on best practices from our industry and others. At the end of the day, though, every application is strictly local.
GDI: What percentage of group sales come from e-commerce?
PYC: It’s about 5% of our sales. It’s still a small part, so we’re allocating resources, both money and people, proportionally – We’re pragmatic and don’t tend to over-invest.
GDI: What are your KPIs? Do you have a sales target?
PYC: We don’t. L’Oreal, for example, had a target of 20% – now 50% – of their sales. For us, we want our fair share in each of the spirits categories at the premium, super-premium and ultra-premium price levels. It’s not about increasing the overall share of e-commerce: We think that it’s driven by the market and the habits of consumption.
Ultimately, we’d expect our e-commerce sales to grow at a faster rate than overall group sales.
GDI: Where are the largest markets for your division?
PYC: The UK, France – if you include ‘click & collect’, which is huge – the US and China are the main markets.
GDI: Which brands are doing well in e-commerce and which are lagging behind?
PYC: We’re finding that our new and craft brands are performing much better in e-commerce than in the market. Malfy gin, for example, is doing extremely well in the UK. E-commerce is a useful channel for launches and initial distribution. The ultra-premium segment is also strong for us, through The Whisky Exchange [the London-based spirits e-tailer acquired in September last year].
I don’t really see any brands that are underperforming in e-commerce.
GDI: Why are the newer brands standing out?
PYC: You can give them almost instant visibility to consumers. It’s much more difficult and takes much longer to reach them with traditional listings – You need to jump through so many hoops.
In e-commerce, if you get an agreement with one of the key players, you instantly get it to millions of people. Then, you can wrap this up with a full digital marketing and advertising strategy.
GDI: How can you sell higher-priced, higher-margin products like spirits in a sales channel most widely used to buy groceries?
PYC: You have to play on different players. It’s the same as the offline market; you don’t have high-level brands in supermarkets. You need to select where the consumers are looking for those products. It doesn’t work for the platform either: [Multiple retailer] Carrefour doesn’t want to hold just a few bottles of a product.
For me, this is a digital overlay of what’s happening in the physical world.
GDI: How are you finding premium-plus success?
PYC: Rule number one is to find the right player who has the right range of products and the right level of service – With high-end products, people also expect high-end service.
Fortunately, for us, we have our own now in The Whisky Exchange!
GDI: How does The Whisky Exchange maintain its independence now that it’s owned by a spirits brand owner?
PYC: Everything is completely independent. They have the same tough negotiations with Pernod Ricard as they have with, say, Edrington.
It’s about making sure the business continues to thrive. The Whisky Exchange built its success on its independence, so it would make no sense to buy it then destroy it.
GDI: Diageo and Campari Group, among others, have also made similar platform acquisitions. Why is that part of your e-commerce strategy rather than creating a new platform of your own?
PYC: We’ve tried to, internally, and we’ve made many mistakes. Learning how a company like The Whisky Exchange works from the inside is super-insightful – This helps us design our strategies better in markets where The Whisky Exchange isn’t present.
Where our internal platforms have been successful is with ‘brand homes’ for the likes of Jameson.
GDI: How grateful are you – as the chief digital officer with Pernod Ricard – for a global pandemic?
PYC: Where the pandemic has helped is in convincing the company to continue investing in digital projects. We’ve had the chance to attract really good talent at a time when a lot of companies, such as consulting firms, were downsizing their projects.
It’s also been a super-efficient time, because everybody has been working remotely. We’ve got to a level of efficiency that we didn’t have before in terms of running and launching international projects.
There’s also been an acceleration of digital adoption. By necessity, the pandemic put a lot of people in a change mindset almost immediately, because they had to adapt to so many things. When you’re running a digital transformation, you need people to be in a change mindset.
This has been a great opportunity for us to put in place new ways of working, which are continuing today.
GDI: What’s the metaverse?
PYC: It’s a place where people meet! A few weeks ago, I was talking to someone from Mexico in a virtual bar for about 20 minutes. That’s what Pernod Ricard is about: Being present where people are meeting.
There’s also an opportunity here for high-end products. Selling and shipping them, especially to collectors, is difficult, so having digital certificates in the form of NF T’s is clearly an opportunity for the industry, so long as you provide the required guarantees.
It’s like the cell phone: What made the cell phone successful was the development of applications, functionalities and new ways of using it.
It’s urgent to invest time and effort in the metaverse. There will be parts that don’t work, but there will be things that are going to be very interesting.
GDI: You can’t do anything wrong in digital, can you!
PYC: That’s the exciting part! But it’s also part of the mindset here – we’ve got the right to fail in Pernod Ricard. If you don’t fail, then you haven’t tried enough.
This article was initially published in the September issue of Global Drinks Intel magazine. For details on how to subscribe, click here.
