We've seen, 'an incredible rise of people drinking cocktails at home': Pernod Ricard North America CEO

Pernod Ricard North America CEO Ann Mukherjee joined Yahoo Finance’s Brooke DiPalma on Yahoo Finance Live to break down the spirits business as New Years Eve swiftly approaches.

Video Transcript

BROOKE DIPALMA: So as we head closer to New Year's Eve, Anna, I was curious what exactly you're expecting as perhaps smaller gatherings happen? Are consumers looking for a different type of drink? Are they looking for perhaps less of a spirits?

ANN MUKHERJEE: Yeah. What we've been seeing actually is an incredible rise in people enjoying cocktails at home. And I think people are looking for that convenience. I think this New Year's what you're going to see is a lot of households-- we're seeing great sales in champagne. We're seeing great sales in people buying those things that make great cocktails like-- one of our brands, Kahlua, it's up 30% because people are learning how to put cordials back together and cocktails. So we've been seeing a lot of spirited sales.

BROOKE DIPALMA: And on that note, I know that you've been a long time partner with Drizly, the alcohol delivery platform. How exactly has this year been different? Of course, different in many ways. And in addition to that, might we ever see a product that goes directly to the consumer eliminating the liquor store as that in between?

ANN MUKHERJEE: Yeah. So it's been an incredible year when you think about e-commerce in this industry. I came from CPG where I was very used to a very sophisticated e-commerce system. I think this pandemic really accelerated that in the alcohol industry and spirits industry. So we've seen triple digit increases in e-commerce sales, whether it's peer plays like Drizly's or click and collect with a lot of liquor stores. And I think that's not going to stop. I think now, consumers have really enjoyed being able to order online and have things delivered. And that is giving rise to direct to consumer.

As you know, this industry is regulated state by state. And in Kentucky recently, there's been some legislation that actually allows-- we have our own American whiskey distilleries in Kentucky. We now have the ability to directly ship to consumers. Wine and champagne have enjoyed that for years. So I think you're going to see a lot of change in this industry when it comes to that.

SEANA SMITH: Hey, Ann. It's Seana. Speaking of that change, I mean it's amazing that statistic that you just rattled off there, triple digit growth that we've seen in e-commerce sales when it comes to wine, and spirits, and liquor. How much has that been able to offset the slowdown or the shutdown that we have seen in restaurants and in bars? And then going off of that, what do you expect to see in 2021? Because you're in regular conversation with these restaurants, with these hotel chains. When are they planning to reopen?

ANN MUKHERJEE: Yeah. It's very directly, as you know, tied to the recovery from COVID and the pandemic. And we have seen a real shutdown in that industry. And it kind of came back a little bit kind of in the summer time frame. But now with the cases going up, we're seeing that shutdown again. I will tell you that there will be a resurgence next year. I think as more people take the vaccines, and people can go out again, you're going to see a resurgence.

But in the meantime, what we've seen is a lot of cocktail delivery. So as people have been delivering food, we've been seeing delivery of cocktails, ready made cocktails. It's beginning to reshape the way people are thinking about the industry and how people are consuming spirits at home just like they're consuming food at home.

ADAM SHAPIRO: I saw that Glenlivet was up, what, 26%. Are you seeing a difference in what people like depending on age? I tend to be older so I do like scotches. Do younger people like scotch? Or are they going for other drinks?

ANN MUKHERJEE: What we're finding is what people are drinking is based on the occasion. And so what people are doing right now is because of the pandemic, we're seeing a lot of what we call quick shopping. People will go into a liquor store, buy what they need, and try to get out as fast as they can. So what they're doing is they're relying on trusted brands, brands they know. They don't have a lot of time. They don't have a lot of money. So they want to make sure that the purchase matters. So that's the first thing we're seeing.

But then the other thing that we're seeing is premiumization. When you went to a restaurant before, you would order a glass of Cognac. And it might have cost you 25, 50 bucks. Now people have realized, I can buy a bottle of Cognac for maybe 100 bucks and get 10 glasses out of it. So what we're also seeing is consumers are beginning to reevaluate the value of spirits. And they're beginning to buy kind of more expensive spirits like Cognacs, high end tequilas. We have a Reserva 44 from Avion. I can't even keep it in stock. And that sells for more than $100.

So you're seeing a lot of shifts in consumer buying patterns as we're going through this pandemic.