7 while that o Diageo slightly decreased rom 28

The British Diageo, still undisputed leader o wines and spirits in the world, is more unassailable. Pernod Ricard, a challenger located only in i th place in the sector in 2000, has since skip steps by purchasing more than 10 billion euros o assets, and reached second place. An unusual Audacity or a amily group but that in estors ha e welcomed. According to Bloomberg, the o ices recommend more than 70 the purchase o the rench group action while they are only slightly more than 50 to the acquisition o the title o its competitor to re el.

Also stock routes o the two competitors or ten years turn clearly or the bene it o Pernod Ricard. O er the period, the course o the latter was multiplied by our, against a doubling only to Diageo. In early October, the hexagonal champion yet announced the ote or the General Assembly o No ember, a resolution to issue warrants o shares conditions pre erential due ree o charge to shareholders, in the limit o 50 o the capital, hostile bid. The creation o these good Breton, the name o the current Minister or the economy, did that slightly lower course o the action while such a program, i it was, would be ery "diluti e" on earnings per share. E idence o the strength o the title.

Pernod course has also progressed on a regular basis and strong despite the many crises o recent years: explosion o the stock market bubble in 2000, September 11, 2001 attacks in the United States, war in Iraq... At the same time, Diageo has experienced many earthquakes. Its course has thus decreased by a third between early 2002 and early 2003 be ore to reco er, irst di icult, then more clearly.

The surprises o the English

The English company owned 100 by the public, not been only penalized by the global stock market conditions but also by a ew unpleasant surprises. In October 2002, it announces 950 million hole in its pension und, brought then to 1.4 billion. At the same time, it su ered a ailure in the United States on its new mixture o rum and cola "ready-to-drink", Captain Morgan Gold, and stops it. A ew weeks later, the amount o the sale o Burger King to Texas Paci ic is re ised downward to a third party, to only 1.5 billion. In the end, the net result o the 2002-2003 iscal year is di ided by ten. What small in estors or se eral years...

or six years, Pernod Ricard has howe er shown a good capacity to integrate many teams and new brands through a policy o decentralization. He bought in December 2000, to EUR 3.7 billion, more than a third o the assets o the Canadian Seagram and, in July 2005, two thirds o the British Allied Domecq, or EUR 6.6 billion. He loses nor time to to get out o debt: end o 2005, it gi es time its shareholdings in Brit ic ( ruit juices and so t drinks), Dunkin'Brands ( ast ood) and se eral brands o spirits. The impact on the net are instructi e: progress continues, which Diageo can a ail.

Moreo er, the challenger takes ad antage o more potential or increase in its operating margin. Thus, in the last iscal year 2005-2006, closed in June, Pernod was increased by 20.2 to 20.7, while that o Diageo slightly decreased, rom 28.9 to 28.2. Lehman Brothers pointed out in early September, in the past year, in estors were disappointed by the igures o Diageo: "This is in part related to their own policy, expenditure o marketing than sales growth, but also due to higher raw material costs." The phenomenon could reproduce on the current iscal year.

Premium brands

Pernod Ricard could urther reduce the operational pro itability gap that, in its strategy, the priority is gi en to the in estment premium brands commercial and marketing, says ideuram Wargny. "Unlike its main competitor Diageo, Pernod Ricard says pre erred higher prices without worrying about excessi e in lation in the costs o packaging and sales promotion," said the broker. The rench group considers that a leader must be ery high-quality more expensi e on segments.

In addition, he is still strong synergies related to its acquisition o the assets o Allied Domecq. More than 60 o the 270 million o sa ings has already been made on the year past and all should be or the iscal year 2006-2007 current, with one year in ad ance on the initial schedule. Certainly, Diageo him also has a program o cost sa ings or the year today, but less than that o Pernod Ricard: it would be to 68 million pounds, according to JP Morgan.

Howe er, the bene its o the rench group could be less. External growth ambitions are still high but may be constrained in the short term by a tense inancial structure (see below). Moreo er, although Diageo is concerned now more seriously about the arri al o the small rench in the irst places o the world ranking, it retains a large head start. Its turno er reached 10.7 billion euros, or about 6.1 billion double posted by Pernod Ricard. The net result, the di erence is e en more glaring: 2.8 billion EUR in the last iscal year, compared to 639 million. Not to mention the market capitalization: approximately EUR 39 billion or the leader, against 15 billion or the challenger.

In the United States, irst world spirits market, Diageo is in a position o strength e en i no igure is gi en with Pernod Ricard, which would ha e only about 10 o market share. According to UBS, the British ad antage also o the reorganization, launched in ebruary 2002, its system o distribution across the Atlantic with a single Distributor and teams o sales dedicated in each State. "The concentration o orce or the sale o about 2,000 people was one o the essential reasons or the gains o market share in olume o er the last twenty-three months in the United States", highlighted the Bank in early September.

The battle o China

inally, Diageo has clearly decided to cross the railway with Pernod Ricard in emerging countries. In 2005 - 2006, in its international branch (outside Europe and North America), where he made a little less than a third o its turno er, its marketing expenses increased by 28. Result, net sales increased by 13 e en though, logically, the operating pro it increased by 9. China, where Pernod Ricard considers hold irst place, is clear sights.

Diageo, the Middle Kingdom could become the second country o spirits as early as next year, surpassing the Japan. In a recent presentation o its Asian operations, the anglo-saxon giant has once again indicated that he was "not satis ied with its place o second in the scotch whiskies in China", note Credit Switzerland behind the rench group. Hostilities between the two protagonists can there ore only intensi y.