On Friday, news broke that Pernod Ricard, the French owner of a slew of household booze brands including Jameson, Absolut, Malibu and Ballantine’s, was in talks with Jack Daniel’s owner Brown-Forman over a “merger of equals” to create a transatlantic spirits powerhouse with annual revenues of nearly €15bn (£13bn).
A coming together of these two giants would arguably be the biggest shake-up in booze since Pernod Ricard became the second largest global wine and spirits player with the acquisition of Allied Domecq in 2005 (with honourable mention to Suntory’s acquisition of Beam back in 2014).
So, why exactly are the two groups in talks, and what benefits could a merger bring to both parties?
Troubled times
There’s no denying that the post-pandemic years have not been kind to global spirits majors. Shoppers surged to stock up on posh spirits as the world locked down, but sky-high inflation and health concerns have contributed to a painful sales slowdown in the past three years. Punitive tariffs and global geopolitical turmoil have also played a significant part.
Both Pernod Ricard and Brown-Forman have been far from immune to these challenges. Organic sales at Pernod slid by 5.9% to €5.3bn in the six months to 31 December 2025, driven by large declines in the US and China. Brown-Forman, meanwhile, saw its revenues dip 5% to $4bn in 2025, with US whiskey hit by sharp declining demand. Investors have fled the duo in their droves, with Pernod and Brown-Forman shares down by a fifth and a quarter respectively in the past year.
The greater scale, synergies and cost savings a merger would bring could certainly help mitigate the challenging conditions dogging the two businesses. “The industry is going through a lull and a merger could provide savings for reinvestment and greater scale,” notes Jefferies analyst Ed Mundy. Cost savings could be put towards “increased feet on the street or upweighted A&P spend” to drive sales growth, he adds.
Minimal category overlap
The synergies could well be meaningful, given there is minimal category overlap in Pernod and Brown-Forman’s portfolios. Brown-Forman overindexes in US whiskey and tequila, which made up almost 84% of its sales in 2024 [IWSR/Bernstein]. By contrast, Pernod Ricard’s portfolio is more balanced, with 40% of net sales coming from scotch and Irish whiskey, and a further 13% and 11% from vodka and cognac respectively.
“In a merger of equals, Brown‑Forman becomes less dependent on American whiskey, which today dominates its earnings base and exposes the company to category‑specific risks,” says Barclays analyst Laurence Whyatt. “Pernod Ricard, meanwhile, would gain authentic scale in US whiskey, a category where it has been notably light.
“The acquisition would also likely strengthen Pernod’s position in tequila, a category it has struggled in, complementing its own brands with Brown‑Forman’s larger offerings at premium and super‑premium price points. The resulting portfolio would be more balanced across categories, countries and consumption occasions.”
US scale
Moreover, and perhaps more significantly, the two companies’ geographic footprints are highly complementary. Brown-Forman generates nearly half of its sales from the US, compared with just 19% for Pernod Ricard in FY25 [IWSR/Bernstein]. But Pernod Ricard sales are skewed towards emerging markets (circa 45%), where Brown-Forman is very underweight. “A combination would likely generate material synergies with minimal competition issues,” says Bernstein’s Trevor Stirling.
Merging with Brown-Forman would also bump Pernod Ricard to the number two player in the US, a market where the French group has struggled for some time. Additional scale remains “a critical determinant of bargaining power with the major US distributors,” Whyatt notes, adding both Brown-Forman and Pernod “have historically lacked the distribution clout of Diageo” across the pond.
From a Brown-Forman perspective, Pernod Ricard’s routes to market in Europe, India and China would provide a significant growth runway for brands such as Jack Daniel’s, Woodford Reserve and El Jimador. Together, Brown-Forman and Pernod would also have a market share slightly greater than Diageo in Europe, according to Barclays.
What’s not to like?
The deal looks good on paper, then. But there are still hurdles to be overcome.
For one, Jameson and Jack Daniel’s – two of the highest volume brands in both companies’ portfolios – are competing brands. The duo have distinct origin stories but both play in the high-tempo dark spirits consumption occasion. Could they co-exist? Jefferies’ Mundy believes so. “A Jack/Jameson portfolio would be a very powerful combination (>$10bn retail sales), which could provide a halo effect for the broader portfolio,” he says.
However, there’s no guarantee the same is true of the controlling families of the two businesses. The Brown family retains control over key decisions of Brown-Forman, while the Ricard family also holds just over a fifth of voting rights in Paris. There would therefore be “lots of vested interests to manage”, Whyatt says, adding that “a merger still has complications, especially when families are involved”.
Both companies have sought to position the deal as the coming together of equals, but Pernod Ricard is the bigger fish and its shareholders would have 63% ownership of the combined entity – based on relative market caps before the story broke – according to Bernstein estimates. Questions to be answered would include who would lead the combined business, what its corporate structure would look like, and where it would be listed and headquartered.
Opinions vary on how easy these hurdles are to overcome. “In our view, the biggest issue is likely to be cultural fit, both at a corporate level and between the controlling shareholders,” says Stirling.
Whyatt, meanwhile, notes Brown-Forman has rebuffed takeover approaches in the past, most notably from Constellation Brands in 2017. That said, Brown-Forman’s statement on talks with Pernod was “more open and constructive” towards a potential deal, he adds.
Mundy, however, sees “ a reasonable cultural fit between the Ricard family and the Browns”, pointing to Pernod Ricard CEO Alexandre Ricard’s US education and “international mindset”.
“Both families take a very long-term view (which is key for the spirits industry), both value provenance and place a high premium on brand building,” he adds.
Top-line challenge
Perhaps the greatest challenge to be overcome, and one that synergies can only go some way towards solving, is that of sliding sales. Pernod Ricard and Brown-Forman’s major brands are nearly all in decline, and the overarching macro environment for spirits remains soft.
“The deal per se would not fix the biggest challenge facing the two companies: top-line growth,” says Stirling, cautioning bringing together two complex organisations is also likely to result in “a lot of disruption”.
The extent to which both parties believe that short-term shock is outweighed by future upsides will become clear in the weeks to come.
No comments yet