The media pressure was too strong. After much criticism against the presence on the Russian market of some of its famous brands, such as Absolut vodka, Pernod Ricard officially ceases all activity there.
In a statement dated May 12, the world’s second-largest wine and spirits group confirmed that it has “ceased all exports of its international brands to Russia at the end of April 2023”.
“We will also stop the distribution of our portfolio in Russia, a process that we believe will take a few months,”, especially for local brands such as the Armenian brandy Ararat, Pernod Ricard, which owns 70 French and international brands, such as Absolut vodka, Havana Club rum, Chivas Regal and Jameson whiskies or Mumm and Perrier-Jouët champagnes, further said.
The disappearance of 300 jobs
A “small” team will remain in place to manage this gradual withdrawal. But eventually, the disappearance of Pernod Ricard will lead to the disappearance of “300 jobs in its Russian subsidiary”, an option that the group says it has “tried with all its might to avoid.”
The protection of its Russian staff had been the argument brandished by Pernod Ricard to justify its return to this market a few months after leaving it.
Before the war in Ukraine, Pernod Ricard made less than 3% of its sales in Russia. But after Vladimir Putin’s troops invaded Ukraine, the spirits group stopped all deliveries to the country. It was aligning itself with the sanctions policy demanded by the European Union. It was not the only one: other major European beverage groups had done the same.
Intentional bankruptcy
But Pernod Ricard returned to Russia a few weeks ago through the back door. With a massive argument: if it had not delivered some stock to its Russian subsidiary, its local team would have incurred criminal proceedings in their country for “intentional bankruptcy.”
“By fully complying with all international sanctions, we have significantly reduced the number and quantity of brands imported [into Russia] to a level that has allowed us to protect our local teams, their livelihoods, and the well-being of their families,” the group said in early May.
Beyond these good intentions, Pernod Ricard likely feared unfair competition. And to run the risk of being boycotted for a long time by a Russian consumer known to have a long memory. Several large international groups are not embarrassed by scruples and have not left Russia. Not to mention that the “grey market” is flourishing there, with, for example, the massive arrival of foreign brands of alcohol via importers from neighboring countries such as Latvia…
Risk of boycott and for the image
Russian stores always distribute big international brands. But they should keep the information secret.
Pernod Ricard has experienced this. Once known, the return of Absolut vodka to the shelves of Russian stores was the subject of intense criticism in Scandinavia, including the Swedish Prime Minister, Ulf Kristersson (whose country is the birthplace of the House), and also a threat of boycott.
In the Republic of Ireland, Pernod Ricard also found itself in the eye of the storm. The Ukrainian ambassador, relayed by local politicians, strongly demanded that Jameson’s, the famous Irish whiskey, no longer be sold in Russia. Or, failing that, that Pernod Ricard be placed on an EU sanctions list.
This situation has become disastrous for its image, so Pernod Ricard has been forced to back down. We are now assessing how to adapt our local organization in light of these decisions while fully respecting all local legal regulations,” the group explains today. Since the outbreak of the war, our guiding principle has been the well-being of our teams, wherever they are based, and we will continue to support our local employees throughout this process.
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Featured photo : © Pernod Ricard
