FRANCISCO JUNIOR

Mozambique 2020 | INDUSTRY | VIP INTERVIEW

TBY talks to Francisco Junior, Country Manager of Pernod Ricard, on growth in the Mozambican market, the company's journey on the African continent, and responses to the COVID-19 pandemic.

Pernod Ricard has grown significantly within the local market over the last five years. How would you describe the evolution of the company in Mozambique so far?

Pernod Ricard Mocambique was established in 2015, and, as with any other new business, it had its challenges, especially as we started operating one year after the market entered a recession. We had to adapt our business plan to accommodate the new environment. Being a young and agile company, we managed to adapt quickly and refocus our energy on the right opportunities. Since 2015, Pernod Ricard has worked on strengthening its presence in the market with the right brands for its consumers. We also worked on strengthening our relationship with our customers who play a key role within our business to achieve our objectives. We went through three phases within this five-year period. The first phase was the implementation phase, where we put in place what we had designed on paper. These were our business plans and ambitions, along with starting to build a strong team and a better understanding of the environment we were playing in. With the knowledge we had acquired, we started on the second stage: to understand the needs of the market and consumers and bring in the right propositions and brands at the right moment. The third phase is consolidating our business in terms of where we stand today. This is where we implement innovations and establish the business as a key player and leader in spirits. Pernod Ricard is the leader in the market in terms of value proposition. We are also quickly rising to become the market leaders in terms of volume in spirits. That is an great achievement in five years.

After opening its South African branch in 1993, Pernod Ricard began expanding its presence on the continent. What potential do you see in Mozambique?

Mozambique offers massive potential in several sectors. If we look at trends in the alcoholic beverages market over the last five years, in the beer segment there is a new brewery company entering and an expansion of Mozambique's traditional brewery industry. There have also been investments in spirits. Within the sector, there is a huge dynamism because consumers are becoming more aware of what they want and are more demanding. They are exposed to developments in other countries and global trends. In the wider economy, we are talking about an emerging middle class with strong purchasing power and a clear idea of the type and quality of products they want to consume. Pernod Ricard plays in the value-added category. As a French company, we have a premium products portfolio and that is where we can offer the best experience to consumers. We are creators of conviviality. For us, it is about the moments we create for our consumers—moments of joy, socializing, and conviviality. We established Pernod Ricard Mozambique as an affiliate in Africa because Africa is more than just the next Asia; it is growing faster than the rest of the world. This is where the opportunity lies. By establishing our position here early and supporting this emerging growth, we will definitely be in a strong position to have our say in the market.

French companies are growing their presence in Mozambique. Is it an asset for Pernod Ricard to grow its market share?

It is important. We are seeing a growth in the French presence and its relevance within the country's economic environment. It is important that we and other French companies in Mozambique grow together, as we have experience from other markets, both in Africa and worldwide. We can easily apply some of that experience here. It can be a leverage at some points, though it is not the single factor that will determine growth in the market. The primary factor is we need to understand the market and localize. Pernod Ricard has localized to the Mozambican reality, both in terms of our structure and the assets and resources we put in place.

How has COVID-19 affected Pernod Ricard's operations and workplace productivity?

The social distancing restrictions imposed by the government directly affected the alcoholic beverages sector in Mozambique. First, it affected the consumption trade, because bars and nightclubs were closed down, and they form the bulk of the business for us—up to 70% for some companies in the sector. The second impact was on consumer behavior. If customers cannot reach your products easily, naturally they migrate to products that are readily available or at some point they reduce consumption. That is the reality for the entire alcohol sector, including spirits, wines, and beers; however, the sector also saw this as an opportunity. Because there is no traditional e-commerce platform in Mozambique per se, what happened was a boom in delivery services and a massive increase in the use of social media to research about products. Social media platforms almost became e-commerce platforms. This was fantastic for brands, though it was also a new challenge. Our consumers were no longer choosing at the point of consumption but instead had time to think about and choose brands via the digital world. They were looking at social media to see who was recommending what. This requires a different approach and way of communicating, so we reinvented ourselves to accommodate this. Pernod Ricard strengthened its presence in the digital space and built partnerships with delivery services to become more competitive and responsive to consumers' needs. In the last few months, with the easing of some of the restrictions, the sector has been responding positively compared to the first three months of the pandemic. However, 2020 will still be the worst year ever for the sector.

What are Pernod Ricard's main goals and priorities for 4Q2020 and 2021?

We have adapted to the pandemic and are resetting our business. It is the start of the fiscal year for us, and we have an understanding of the consumer dynamics. For the remainder of 2020, we want to implement the “new, new." This means we will provide our consumers with different experiences tailor-made to this current situation because they need us more than ever. They need a moment of conviviality and socializing to overcome the daily challenges relating to COVID-19 and this new norm.