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Espresso martinis seeing ‘a real resurgence,’ Pernod Ricard North America CEO says

Pernod Ricard North America CEO Ann Mukherjee joins Yahoo Finance Live to discuss the resurgence of the espresso martini, beverage trends, inflation, supply chain constraints, business innovations, the demand for travel, and the outlook for drinking in the meta-verse.

Video Transcript

BRIAN SOZZI: If we have learned anything from the early crop of earnings reports for this season, it's this-- people are out traveling again, whether it's a vacation or a staycation. And while they are out there traveling and enjoying themselves once again, they could very well be enjoying a cocktail or five. Let's check in on the state of the alcohol industry with Pernod Ricard North America CEO Ann Mukherjee. Yahoo Finance's Brooke DiPalma is here as well.

Ann, always great to get some time with you. We're really getting some good reads on travel demand around the world. I know that's a key business for your business and then the liquor industry more broadly. What are you seeing through that prism of travel?

ANN MUKHERJEE: It's coming back. People are ready to kind of live again. And we're seeing travel pick up. More importantly, we're seeing people come back to restaurants and bars. And we've seen a great resurgence and we hope it continues.

BROOKE DIPALMA: And, Ann, also to-- go ahead, Jared.

JARED BLIKRE: Oh, sorry, I didn't mean to interrupt you there, Brooke. But I just wanted to ask you-- as we return to the office, as we return to our normal lives, things aren't really going back to normal. Just wondering what kind of trends you've noticed that you think are here to stay over the last two years.

ANN MUKHERJEE: Yeah. When it comes to coming back to the office, I think people have figured out, look, I need to be purposeful when I come back. So just don't ask me to come back for the sake of coming back. If you want me to come back just to be at a computer, I can do that from home. I got probably better Wi-Fi.

Instead, what people are asking for is if you want me to come back to the office, let's make it really meaningful. And so I can interchange, I can collaborate, I can do ideas. So the number one thing that I think workers are asking for is flexibility. And it's a new way of working.

And we've proven to ourselves that we can be just as productive being in our homes. But I do think it's important to come out of the homes, because isolation is not a good thing for business. You need people to think about ideas, and think outside of the box, and you do that in-person.

BROOKE DIPALMA: And, Ann, over the past two years, really most recently, we've seen so many major headwinds hitting consumers-- we've had supply chain strain, we've had inflation. Are you passing along pricing to consumers?

ANN MUKHERJEE: Yeah, look, this supply chain situation is hitting everybody. It is structural. It is global. There are some things that are more short-term. So I think people have to think about business innovation around the supply chain situation. We're doing it. And there are some real hard increases in input costs.

And again, we're seeing some pricing actions across not only our business, but the entire industry. Right now, consumers, again, they're voting with their wallets. We're seeing a lot of premiumization in this category. And so the price increases consumers are willing to understand. And right now, we're only passing on those things that we think are real cost increases, but we're watching it very, very carefully.

BROOKE DIPALMA: And, Ann, something else that consumers are starting to understand is the uptake of espresso martinis that we're seeing out and about at the bars. Break down for us-- you have Kahlua underneath your portfolio, is that making a comeback?

ANN MUKHERJEE: Absolutely. We saw that comeback, actually, even within COVID as we saw a lot of in-home cocktail-making. And I think a lot of people were drinking chocolate and espresso martinis. And with brands like Absolut and Kahlua, that works really well in our favor.

And what we're seeing now is people enjoyed them at home and now they want to enjoy them in the restaurants. So we're seeing a real resurgence of that cocktail, among many other cocktails coming back. And that's really great for our portfolio when we have such a wide portfolio of brands that are great for cocktail-making.

BROOKE DIPALMA: And another way you're looking to reach consumers is in the metaverse, you're actually launching Absolut's Coachella activation on Decentraland. So I want you to explain exactly how that activation works and why you chose that platform. I mean, we have RoBlox, we have Meta's Horizon World-- so why on Decentraland?

ANN MUKHERJEE: Listen, we really wanted to partner with Decentraland. And we made that purchase because they follow a lot of our values around responsibility. And it was important for us to partner with someone that really matched our values of what we call conviviality-- bringing people together and safe ways. And we're excited about this, because this is the first ever platform where we can actually allow real life to meet virtual life.

And so we are literally recreating the Coachella experience in Absolutland. People who are at Coachella can actually enter the metaverse, recreating the actual experience that you would have at Coachella. And we are bringing fashion, and music, and cocktail-making even to the point where if you're in Absolutland, we have a vending machine where you can actually order the cocktail to be delivered to your home.

So it is one of a kind experience. Let me tell you, why are we doing it? Because consumers want you to go where they are. And I hate to date myself, but think way back to websites and the internet-- we didn't know what we were doing then. This is the next evolution of how consumers want to live.

And so if we're not experimenting early and we do it with Absolut because it's a brand that brings people together, this is our real intent of learning as we go. And we're very excited about it.

BRIAN SOZZI: Ann, before we let you go, you know, I remember talking to you back in your PepsiCo days. You have a really phenomenal story. Talk to us a little bit about your journey. How did you end up in this role?

ANN MUKHERJEE: Yeah, I will tell you. I'm the first ever outside hire at Pernod Ricard to be a CEO. And I'll tell you, Brian, I just think more and more CEOs need to come from marketing backgrounds. We live in a world of disruption. And if you don't disrupt your total business system to be demand-centric, you will be pretty much out of business.

We've seen it over and over again. So your ability to entirely change your entire business operating system to understand where consumers are going, where shoppers are going-- take this Coachella metaverse thing that we're doing. Look, that evolves everything from IP to supply chain. And you've got to be able to wire your entire business around where demand is going. So more and more CEOs coming from marketing backgrounds really enable companies to think about how they can avoid being disrupted.

BRIAN SOZZI: All right, we'll leave it there for now. Pernod Ricard North America CEO Ann Mukherjee, thank you so much. Good to see you as always. And good to see you too, Yahoo Finance's Brooke DiPalma.