The alcohol concern Pernod Ricard, which owns the brands Chivas Regal, Jameson, Ararat, is preparing to close its representative office in the Russian Federation

The alcohol concern Pernod Ricard, which owns the brands Chivas Regal, Jameson, Ballantine`s, Ararat, is preparing to close its representative office in Russia. Laurent Pilet, who has been the general director of the local structure since 2019, moved to another region, and Ignaty Arakelyan, who led the Yerevan Brandy Factory (YBC), which is part of Pernod Ricard, will oversee the termination of the business. The concern’s brands will remain on the market through parallel imports, and maintaining an office in Russia today is fraught with risks, experts say.

On August 8, Ignaty Arakelyan, who headed the YBC group and the ex-minister of agriculture of Armenia, became the general director of the Russian representative office of the Pernod Ricard alcohol concern P.R.Rus JSC, follows from the Unified State Register of Legal Entities. Mr. Arakelyan replaced Laurent Pilet, the head of Pernod Ricard in Russia since 2019, in this position. As stated in Ignaty Arakelyan’s Linkedin profile, since 2018 he has been working as the Financial and Administrative Director of Pernod Ricard in Eastern Europe.

Pernod Ricard told Kommersant that the former head of the Russian office had moved to a new position in another region. Mr. Arakelyan clarified that P.R.Rus is going through the necessary procedures to stop operations and the company has no other plans. According to a Kommersant source in the market, almost the entire team has already left P.R. Rus, and the remaining employees may leave before the end of August.

The Pernod Ricard portfolio includes the brands Chivas Regal, Jameson, Ballantine`s, Beefeater, Absolut, Olmeca, Ararat, etc. In 2020–2021, according to market participants’ data, the company imported approximately 14 million liters of strong liquor in the Russian Federation, excluding Ararat. And in 2022, after the outbreak of hostilities in Ukraine and the tightening of Western sanctions, it reduced imports to 6.95 million liters. In May 2023, Pernod Ricard announced the cessation of supplies of all international brands to the Russian Federation. In January-April, according to Kommersant’s data, the company imported 4.6 million liters of alcohol.

CIFRRA Director Vadim Drobiz notes that Pernod Ricard’s key brands will remain in the country through parallel imports. And it is risky to maintain a representative office today, which shows pressure abroad on Bacardi after publications about the continuation of the company’s work in the Russian Federation, he points out. The local distribution built by Pernod Ricard, continues Mr. Drobiz, will be destroyed, but consumers and brand recognition will remain. Alexander Stavtsev, head of the WineRetail information center, adds that international alcohol brands in Russia today can have ten independent importers, and global players have been building centralized supplies here for the past 30 years through their representative offices. “Someday this work will have to be started again,” the expert notes.

The Ararat cognac produced at YBC continues to be supplied to Russia, says a representative of Pernod Ricard. In 2021, Luding Group became the distributor of this brand in terms of channels, including regional and local networks, wholesale, corporate and private buyers. As of today, the distribution contract is valid, and cooperation on the brand is going on as usual, Luding Group executive director Ernest Khachaturyan told Kommersant.

A Kommersant source in a large alcohol company notes that 70–90% of Ararat cognac is consumed in Russia, and there are no other markets for a drink with such volumes of consumption. The interlocutor of Kommersant heard that Pernod Ricard could give away the entire distribution of the Luding Group brand up to the sale of YBC, but so far no agreements have been reached. Another Kommersant source on the market also knows about the possible sale of Ararat production. According to him, Luding Group is an interested party, but the seller is valuing the asset too expensive. Alexander Stavtsev points out that Luding Group previously built the distribution of the Armenian brandy “Noy” in the Russian Federation (today it is part of the portfolio of the Beluga Group), so it can independently cope with the distribution of Ararat. Pernod Ricard denies any talk of selling Ararat.

Anatoly Kostyrev