Pernod Ricard USA’s Strategic RTM Transformation and Its Implications for Long-Term Growth

Pernod Ricard USA’s strategic overhaul of its Route-to-Market (RTM) framework, anchored by the GEM (Growth, Execution, and Momentum) and Ready-to-Drink (RTD) divisions, is a masterclass in leveraging distributor partnerships and specialized commercial structures to navigate a volatile market. Despite a 6% decline in U.S. sales for FY25, driven by tariff uncertainty and inventory adjustments, the company’s targeted approach to high-growth categories and under-prioritized brands has positioned it to outperform peers and expand margins.

The GEM division, launched to incubate and scale high-potential spirits brands, exemplifies this strategy. By adopting a state-by-state model with distributors such as Crescent Crown, Johnson Brothers/Maverick, and Southern Glazer’s Wine & Spirits, Pernod Ricard has created a nimble, localized execution engine. This division, currently generating $120M in net national sales (NNS), is on track to reach $250M by FY27 [1]. The focus on collaboration and agility—led by Chief Commercial Officer Paul Basford—has enabled the company to address gaps in brand visibility and retail execution, particularly in control states where State Managers now play a pivotal role in monitoring program execution [3].

Meanwhile, the RTD division has demonstrated resilience. In a U.S. spirits market broadly stable but marked by subdued consumer confidence, Pernod’s RTD portfolio grew 7% in Q2 FY25 [1]. This performance underscores the category’s potential, especially as younger consumers shift toward convenience and premiumization. The company’s recent partnerships with Reyes Beverage Group and Crescent Crown in seven key states further amplify its ability to capture market share in this fast-growing segment [1].

The financial implications of these strategies are clear. Pernod Ricard achieved a 64-basis-point organic operating margin expansion in FY25, driven by a €900 million efficiency program and disciplined cost management [2]. Free cash flow surged to €1.1 billion, a 18% year-over-year increase, as the company optimized inventory and working capital [2]. These metrics, combined with a proposed dividend of €4.70 per share, signal a balance between reinvestment and shareholder returns.

Critically, the RTM and GEM strategies are not just about short-term fixes. They reflect a long-term vision to adapt to market dynamics. For instance, the restructuring of the commercial organization into two specialized divisions—RTD and GEM—ensures that resources are allocated to high-growth opportunities while maintaining core brand strength. Brands like Jameson and Kahlúa, which outperformed their competitive sets in FY25, illustrate the effectiveness of this focus [1].

Challenges remain, particularly in China and the U.S., where Pernod Ricard’s sales fell 21% and 6%, respectively, in FY25. However, the company’s CEO, Alexandre Ricard, has framed 2026 as a “transition year,” with recovery expected in the second half as tariff uncertainties resolve and distributor inventories normalize [2]. Analysts at Jefferies note that the stock may already have priced in much of the near-term pain, making it a compelling long-term play as margin expansion and market share gains solidify [2].

For investors, the key takeaway is that Pernod Ricard’s RTM transformation is a blueprint for sustainable growth in a fragmented market. By combining deepened wholesaler alliances with specialized divisions, the company is not only defending its existing portfolio but also capturing emerging demand in categories like RTD. As the U.S. and global spirits markets evolve, Pernod Ricard’s agility and strategic clarity position it as a standout in the premium spirits sector.

**Source:[1] Pernod Ricard USA's New Route-to-Market (RTM) Strategy and GEM Division [https://www.prnewswire.com/news-releases/pernod-ricard-usas-new-route-to-market-approach-deepens-wholesaler-partnerships-and-sharpens-portfolio-focus-for-growth-302541524.html][2] Pernod Ricard: Steering Through a Challenging Environment [https://www.businesswire.com/news/home/20250827651602/en/Pernod-Ricard-Steering-Through-a-Challenging-Environment-With-Agility-Discipline-and-Strategic-Conviction][3] Pernod Ricard Hiring State Manager, GEM [https://www.linkedin.com/jobs/view/state-manager-gem-control-states-at-pernod-ricard-4279607561]