Pernod Ricard acquires Absolut vodka for $8.89 billion

31 March 2008

French drinks giant Pernod Ricard today won a three-way race to acquire the Swedish-based state-owned Vin & Sprit (V&S), the makers of Absolut vodka, in a deal valued at $8.89 billion or €5.6 billion.

This is one of the biggest acquisitions in the history of drinks companies, and may well catapult it towards the top of the chain in the spirits world from its current runner-up position. However, it is not the biggest spirits deal, not even for Pernod Ricard. Three years ago it had purchased Britain's Allied Domecq for $13 billion.

Absolut is currently the second most popular vodka brand in the world after Smirnoff, and the fastest growing. It currently sells 10 million cases, but is quite a long way behind Diageo-owned Smirnoff which shifts 23 million cases a year. Each case is equivalent to 12 bottles or seven litres per case. In terms of all spirit brands, its stands fourth after Diageo's Smirnoff vodka, Bacardi rum and Diageo's Johnnie Walker scotch whisky,

Pernod Ricard said after the deal its annual sales volume would total 91 million 9-litre cases of spirits, based on industry figures. That will put it just behind leader Diageo with 93 million.

The Swedish government said the French company - owner of brands such as Chivas Regal whisky, Mumm champagne and Beefeater gin - intends to keep Vin & Sprit and Absolut vodka based in Sweden. Pernod Ricard chairman Patrick Ricard confirmed as much when he said, "There is no written contract about that but the value of the brand is because it is Swedish. A Swedish brand must be produced in Sweden".

Diageo had been one of the contenders for Absolut, but had pulled out of the race last month when it agreed to set up a £460m joint venture with Ketel One, the Dutch family-owned vodka brand.