Pernod Ricard: Termination of the Distribution Agreement for Vin & Sprit Brands by Future Brands in the US
The initial contractual term of the distribution agreement for V&S brands by Future Brands, a joint venture company between V&S and Fortune Brands, scheduled to end on February 2012. The joint venture partners agreed to an early termination on Oct. 2008.
29/08/08 Pernod Ricard has announced the signing of an agreement with Fortune Brands for an early termination of the distribution by Future Brands of Vin & Sprit brands in the US, and in particular Absolut, effective October 1st 2008.
The initial contractual term of the distribution agreement for V&S brands by Future Brands, a joint venture company between V&S and Fortune Brands, was scheduled to end on February 2012. The joint venture partners have agreed to an early termination of this agreement on October 1st 2008 with Pernod Ricard paying to Fortune Brands a compensation of US$ 230 million (EUR 156 million). Together with the termination of the distribution, V&S will also stop being a shareholder in Future Brands.
Absolut and the rest of the V&S portfolio will join Pernod Ricard USA's portfolio of leading spirits and wines brands on October 1st 2008. The savings generated by stopping the payments of commissions to Future Brands, the quicker than anticipated implementation of cost synergies on our North American structures and the very positive impact of an immediate combination of our brand portfolios in the US will more than offset the costs of exiting this distribution agreement.
Separately, and as part of the announced disposal plan, Pernod Ricard will sell the Cruzan rum brand and related assets to Fortune Brands for an amount of US$ 100 million (EUR 68 million). Cruzan had been acquired in 2005 by V&S and has been since then a fast growing brand, reaching more than 750 000 9L cases in 2007 and a close to break even contribution after advertising and promotion costs.
Commenting on this agreement, Patrick Ricard stated:
"The immediate takeover of Absolut distribution in the US by Pernod Ricard USA is excellent news for the Group. We will now market and distribute the leading imported spirit and Premium vodka in the U.S., which greatly enhances our position. Through both our size and the quality of our portfolio, we are now the clear number two in the North American spirits market. These factors will allow us to strengthen our growth in this key market.
I also wish all the best and a continued success in the future for the Cruzan rum brand and the Cruzan teams within Fortune Brands."
