Pernod Ricard Mulls Over Selling Champagne Brand GH Mumm

Pernod Ricard, the world's second-largest premium drinks group, is reportedly considering selling its champagne brand, GH Mumm. The French company is said to be restructuring its portfolio to focus on higher-margin spirits for a more profitable return on capital. However, Pernod Ricard has not confirmed this move, stating that it regularly evaluates its strategic opportunities, including potential divestments.

GH Mumm, a well-known Champagne brand, owns 260 acres of grand and premier cru vineyards. The brand, founded in 1827, is recognized for its "Only the Best" branding and iconic Cordon Rouge red ribbon label. Pernod acquired Mumm in 2005 during a joint takeover of Allied Lyons with Diageo.

According to reports, Pernod Ricard would likely not consider a price less than €600 million for Mumm, approximately three times its annual sales value. This comes as Champagne houses face pressure due to falling demand amid economic slowdown and persistent inflation in Europe, America, and China. Champagne sales reportedly dropped by about 10% last year.

Last year, Pernod Ricard sold its Australian and New Zealand wine brands to a consortium led by Bain & Co due to low returns. The sale included brands such as Jacob’s Creek, Orlando, St Hugo, Stoneleigh, Brancott Estate, and Spain’s Campo Viejo.

Despite the potential sale of Mumm, Pernod Ricard is not expected to exit the wine industry entirely. The company reportedly plans to keep the prestigious Perrier Jouet Champagne brand and also owns the celebrated Provencal rose, Sainte Marguerite.

However, Pernod Ricard is facing challenges. Sales of Martell Cognac were declining even before China imposed additional duties as part of a tariff war with the European Union. The company is also threatened by potential tariffs from the United States. Last week, Pernod Ricard's finance director, Helene de Tissot, stated that tariffs imposed by China and potentially by the United States could impact the company by about €200 million a year. The company recently brought forward its interim results announcement and reduced its forecasts for the year to the end of June, predicting a low single-digit decline in organic net sales for the full year.