As Valentine’s Day beckons, it seems that Pernod Ricard’s on-off love affair with Champagne has become a little toxic, with the news – tacitly confirmed by dependable sources – that it is considering the sell-off of Mumm.
Indeed, it seems that the couple have already sought the corporate equivalent of relationship counselling: according to Reuters, Pernod has enlisted investment bank Rothschild & Co. to “explore options”. That doesn’t mean that any deal is imminent or inevitable but, if your partner tells you they’re seriously considering throwing you out of the house, it doesn’t exactly fill you with optimism either.
How did it come to this? Most of Pernod’s wine assets – including Jacob’s Creek, Brancott Estate and Campo Viejo – were sold off last year. Having resisted years of speculation concerning such disposals, now it looks as if the company might have acquired a taste for it.
The Champagne brands, along with Kenwood in California and Sainte Marguerite in Provence, were thought to be immune to this logic, their fatter margins imbuing them with qualities closer to luxury spirits than wine.
Now, however, Mumm may be surplus to requirements at Pernod Ricard, but not stablemate Perrier-Jouët. Compare and contrast the relative market positions of those brands and that’s hardly surprising. It may have less than half the volumes of Mumm, but PJ has much more enticing luxury credentials: strong positions in the US and Japan; flagship prestige cuvée Belle Epoque.
Looking at Mumm in the longer term, I wonder if Pernod Ricard has ever decided exactly what it wants from the brand, or fully committed to putting those desires into practice.
The late Patrick Ricard – uncle of current chairman and CEO Alex Ricard – once proclaimed that he had no interest in owning a Champagne house. But Patrick Ricard was a canny entrepreneur who always favoured pragmatism over dogma; when the French group took control of Mumm and PJ via the Allied Domecq acquisition in 2005, he said he was happy because his sales teams had been demanding a Champagne. “If you don’t have one, you’re leaving the field open to competitors,” he added.
By 2016, Pernod’s ambitions for Mumm had taken on an almost fantastical air, aiming to triple turnover and double volumes over the next decade, snapping at the heels of category leaders Moët & Chandon and Veuve Clicquot. In Champagne – where production is strictly limited and competition for grape contracts fierce – that always looked like one heck of a task.
If those ambitions were quietly shelved, efforts to premiumise Mumm, and to lessen its dependence on the cut-throat French market – historically responsible for more than half of its volumes – continued. However, price rises introduced during the post-Covid bubble of 2022-23 appear to have encountered resistance from an increasingly price-sensitive consumer base.
From a high water mark in fiscal 2022, Mumm has suffered successive organic revenue declines of 5% (FY23), 12% (FY24) and 6% (H1, FY25). At the same time, the brand’s price/mix figures have been more positive, rising by 11% in FY23 and by 2% in FY24.
It’s hard to retrofit a more premium positioning to a brand that has long depended on the mass market for a sizeable chunk of its volumes. Price increases run the risk of placing your product out of reach of your core consumers, who migrate to something that seems to offer better value.
By contrast, while Perrier-Jouët may have had its challenges over the past couple of years, its more elevated positioning helps to insulate it from the worst of this. For the most part, its customers just aren’t feeling the same level of financial pain.
Champagne isn’t having the easiest time of it right now. Global shipments fell by over 9% to an estimated 271m bottles in 2024 (well below the anticipated figure of 290m bottles), meaning that volumes have declined by one-sixth in the past two years.
Anecdotally, consumers in key markets continue to feel insecure about their finances and the cost of living. When the ‘bottomless brunchers’ in the US start quaffing Prosecco ahead of Champagne – as it seems many are – the concern is that a money-saving tactic might become an ingrained habit.
With a reputed price tag of at least €600m ($625.3m), there are bound to be suitors for Mumm, not least because of its sizeable vineyard holdings of 218 hectares, 78% of them planted to Pinot Noir in hotspot crus such as Verzy, Verzenay, Aÿ, Bouzy and Ambonnay.
In the context of emerging markets in Africa and elsewhere, Mumm’s combination of strong brand equity and scale could yet give it a key role to play
But… Is it really a good idea to sell and to sell now? Even when taking into account the challenges outlined above, the case is a dubious one at best. It’s all too easy to get spooked by current market conditions and no finance executive is going to be happy with Mumm’s recent numbers – but, unless we really are at the beginning of a structural, rather than cyclical, decline in global Champagne consumption (which I doubt), holding tight and riding out the tough times looks like a wiser course.
This week, Pernod Ricard announced it had wholly acquired South African gin brand Inverroche. Pernod Ricard Africa MD Sola Oke talked of the company’s “belief in the continent’s potential as a significant white space opportunity in the world for the premium-plus spirits and Champagne segment”.
Well, absolutely – but good luck trying to exploit that potential solely with the lower-volume, higher-value proposition of Perrier-Jouët, especially if it can command higher prices in the restaurants of Tokyo and New York. In the context of emerging markets in Africa and elsewhere, Mumm’s combination of strong brand equity and scale could yet give it a key role to play.
After all, that fits with the recent history of Champagne, which has been one of driving value using marquee brands in an expanding roster of overseas markets. Whatever the short-term bumps in the road, I don’t see that journey ending just yet.
This July, Mumm and Pernod Ricard are due to celebrate their 20th anniversary – it will be two decades since that 2005 Allied Domecq deal was completed. Any relationship lasting that long is bound to have had its ups and downs – but I’m not convinced that a couple of rather fraught years justify filing for divorce just yet.
"It may be wiser for Pernod Ricard to hang on to Mumm Champagne" was originally created and published by Just Drinks, a GlobalData owned brand.
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