Inspiring action - Pernod Ricard

Inspiring action - Pernod Ricard
ANNUAL REPORT 2016/2017




INSPIRING
  ACTION
Inspiring action - Pernod Ricard
PERNOD RICARD                                                                                           ANNUAL REPORT 2016/2017




                             p.2-3                                            p.4-5                                                  p.6-9
                          The Artist                         Message from the Chairman & CEO                             #365 days on the ground
                        Martin Schoeller                             Alexandre Ricard                                     with Alexandre Ricard




                                                                               1
                                                                                -
                                                                  INSPIRING ACTION OR…
                                                         HOW WE CREATE VALUE
                       p.12-22                             p.24-28                                 p.30-38                                p.40-41
                  The Pernod Ricard                   A decentralized                 High standards of governance                     In summary:
                        Mindset                     global organisation                     - Board of Directors                      our value chain
                 - Culture and values           - Organizational structure                     - Committees
                   Generating value                     - Milestones                     of the Board of Directors
                for long-term growth               in the Group’s history                    - Executive Board
               - The materiality matrix           - Pernod Ricard across                  - Executive Committee
             - Our commitment to S&R                      the globe                     - Headquarters Directors
                   - Our point of view                                                  - Headquarters in figures
                  by Alexandre Ricard
             A dynamic brand portfolio
                - The House of Brands
            A consumer-centric strategy
                   - 4 Essentials and
                     4 Accelerators




                                                                               2
                                                                   -
                                                         4 BATTLEGROUNDS FOR
                                                         OUR FUTURE GROWTH
                     WINNING                          BUILDING                                FUNDING                                ENHANCING
                 IN KEY MARKETS                    PASSION BRANDS                           THE JOURNEY                         PERFORMANCE CULTURE

                       p.44-50                             p.52-58                                 p.60-66                                p.68-74
               - The House of Martell,          - L’Eden by Perrier-Jouët,              - Portfolio management,                 - Pernod Ricard University,
                  The quest for new               An enchanting getaway                    Optimal allocation of                  Targeting performance-
                 consumers in China                in the heart of Tokyo                      our resources                             based culture
                    - Absolut Lime,                    - Chivas Regal,                       - Supply chain,                       - Travel Retail EMEA,
               Chronicle of a success            Social entrepreneurship                  “Simplify For Growth”                Digital technology to enhance
                 in the United States               is at the heart of the                                                        our performance-driven
                                                   Chivas Regal strategy                                                                   culture




                                                                               3
                                                                    -
                                                           THE YEAR’S SUCCESSES
                 MARKETS                                                                BRANDS                                                            THE BIG
                             p.81              p.86                  p.92                 p.96                  p.102
                        Pernod Ricard      Absolut Vodka        Havana Club              Martell             Royal Salute
                        EMEA/LATAM
        p.78-79
        The global                             p.87                  p.93                 p.97                  p.103
                             p.82                                                                                                  p.106-107
      spirits market                        Ballantine’s          Jameson                Mumm                The Glenlivet                               p.108-109
                        Pernod Ricard                                                                                             Accelerated
                                                                                                                                                        BIG is getting
                            Asia                                                                                                 and diversified
          p.80                                 p.88                  p.94                 p.98               p.104-105                                     bigger!
                                                                                                                                    growth
     Pernod Ricard                           Beefeater               Ricard           Perrier-Jouët       Campo Viejo,
                             p.83
     North America                                                                                       Brancott Estate,
                        Pernod Ricard
                                               p.89                  p.95                 p.99              Kenwood,
                            Global
                                           Chivas Regal              Malibu             LeCercle          Jacob’s Creek
                         Travel Retail




                                                                               4
                                                             -
                                                     OUR PERFORMANCE:
                                                   SUMMARY OF KEY FIGURES
                            p.112                            p.113                               p.117                               p.118
                         Increasingly                      Key figures                       A targeted                      In the financial markets            P.120
                        diverse growth                     2016/2017                        M&A strategy                             2016/2017
                            drivers
                                                                                                                                                                 Discover our
                                                                                                                                                                 publications
Inspiring action - Pernod Ricard
3
THE ARTIST                                                                                                                                PERNOD RICARD   ANNUAL REPORT 2016/2017
                                                                                                                                                                                     2




                                              • T h i s y e a r ’s c a r t e b l a n c h e •




                                       P           E           R           N            O           D

                             MARTIN
                                        R            I        C           A           R           D

         SCHOELLER
                                  C           H           O           O           S           E           S



         C
                   onsidered a master of contemporary photogra-        possible. Each year since Pernod Ricard was established
                   phy, Martin Schoeller is known for his close-up     in 1975, we have given a selected artist carte blanche
                   portraits, shot in strong, almost harsh lighting.   to create a compelling image for the cover of our annual
                   Born in Munich (Germany), Martin was influ-         report. From the French sculptor César (1991) to the
         enced from a young age by the extraordinary work of           Scottish painter Bruce McLean (2000), eclecticism has
         August Sander, a photographer                                                            been the order of the day. Since
         who is renowned for his portrait                                                         2009, our art campaigns have
         work of the poor, the working                                                            focused on the use of striking
         class and the bourgeoisie of                                                             photographic images to capture
         early 20 th century Germany.
                                                      With so many people                         the essence of Pernod Ricard;
         Later, he discovered, and was         from around the world, there our employees, who serve as
         influenced by, the work of               was no shortage of things                       m o d e l s fo r t h e ar t ist , are
         Bernd and Hilla Becher, found-                                                           treated to an extraordinary
         e rs o f th e fa mous B ec her
                                                    to talk about: their lives,                   experience marked by convivia-
         school. As a freelance photo­             their countries, their jobs.                   lité, sharing and dialogue. For
         grapher, he wandered the                And they taught me a new                         this 42nd edition of our annual
         streets looking for people to                                                            report, Martin Schoeller has
         photograph. The visual force
                                                        word: convivialité!                       produced a series of 18 power-
         of his portraits, rapidly won                                                            ful images, offering an unfil-
         him attention from the most                                                              te re d lo o k a t t h e fa ce s o f
         iconic publications, including                                                           Pernod Ricard. Schoeller steps
         Rolling Stone, Esquire, Vogue, Vanity Fair and W. In 1999,    outside the conventions of portraiture by using identical
         he joined Richard Avedon as staff portraitist at The New      lighting, framing and angles to explore the intriguing
         Yorker. Over the years he has taken thousands of photo-       depths of each employee’s gaze. Counterintuitively, he
         graphs of celebrities as well as of “ordinary” people, all of has succeeded in both revealing the unique and rich per-
         whom he photographs in the same way, his signature            sonalities of each of the 18 employees, and at the same
         style: extreme close up portraits. Through his photo-         time, the shared spirit of commitment to Pernod Ricard’s
         graphs, Martin seeks to document the “human essence”          vision – to become true “Créateurs de convivialité”! They
         and to depict his subjects in the most “honest” way           form the faces of “Inspiring Action” by Pernod Ricard.



                       In these pages you’ll discover 18 portraits taken during a shoot in New York.
                             They will also be exhibited at Paris Photo, 9-12 November 2017.
                     Pernod Ricard will be giving away 1,000 tickets to the event, which is the world’s
                                  largest international art fair dedicated to photography.



                                                             For more information:
                                                            www.pernod-ricard.com
Inspiring action - Pernod Ricard
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C AT C H I N G U P W I T H A L E X A N D R E R I C A R D   PERNOD RICARD                                                                       ANNUAL REPORT 2016/2017
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                                                                               • Message from the Chairman & Chief Executive Officer •




                                                                                                          C H A N G E

                                                                  ALEXANDRE
                                                                                                         T O                      S T A Y

                                                                                         RICARD
                                                                                           T H E                          C O U R S E




                                                                    T
                                                                                     his coming year sees the long-awaited         For two years now, we have reviewed our priorities by
                                                                                     return of the Grand Prix de France to the     focusing on our “Four Essentials”, namely Operational
                                                                                     Circuit Paul Ricard, the track built by my    Excellence, Talent Development, Sustainability &
                                                                                     grandfather in 1970. It was there that I      Responsibility, and Route-to-Market/Consumer, as well
                                                                                     watched the epic duel between Alain Prost     as on our “Four Accelerators” of Portfolio Management,
                                                                                     and Ayrton Senna in 1988. As I remember,      Digital Acceleration, Innovation and Premiumisation &
                                                                    they were neck and neck right up until the pit stops to        Luxury. We have reviewed the organisation of three of our
                                                                    change tyres. Senna’s crew was a crucial 3 seconds             key markets, the United States, China and Travel Retail,
                                                                    faster than Prost’s, enabling Senna to take the lead on        and restructured them with only one goal in mind: the
                                                                    lap 37. With over half the race left to run, and driven by     consumer. We have also set in motion numerous perfor-
                                                                    his innate will to win, Prost radically changed his            mance improvement projects – for example, the
                                                                    approach and the “Professor” became more daring and            “operational excellence plan” that we launched last year.
                                                                    assertive at every turn, clocking the fastest time of the      September 2017 saw the opening of the first Pernod
                                                                    race on lap 45. Prost kept pushing Senna, observing            Ricard university campus, which is dedicated to enriching
                                                                    every slight mistake made by his opponent until Senna          the Group’s “Mindset” with our broad spectrum of tal-
                                                                    hesitated while overtaking a straggler and Prost               ents. The 6,500m2 site is set in the 170-hectare park of
                                                                    pounced, brilliantly cutting through and overtaking both       the Domaine de la Voisine , which was bought by my
                                                                    cars on lap 61. The rest, as they say, is history.             grandfather in 1954.
                                                                    This story perfectly sums up the situation we’re facing at     While the race is far from won, this year’s results are
                                                                    the moment. To stay the course in today’s challenging          solid proof that we have made the right strategic choices.
                                                                    environment, a company needs to stay true to its DNA           We are growing faster and more diversely, thanks to the
                                                                    and at the same time, be prepared to change its ways of        effective implementation of our strategic model and the
                                                                    working.                                                       operational changes we have made. There is no doubt in
                                                                    In 2015, I laid out our roadmap as I saw it, one with which    my mind that we can continue to expand our horizons.
                                                                    we would achieve our medium-term objective of acceler-         With this vision for the future, our teams are engaged to
                                                                    ating our top line growth to reach 4 to 5% and delivering      take on four challenges: win in key markets – the USA,
                                                                    operating leverage. Today we are in the process of             China, India and Travel Retail; build “passion” brands;
                                                                    achieving this goal, delivering solid and improving results    fund our journey more efficiently to enable us to finance
                                                                    year after year.                                               our ambitions; and strengthen our performance culture
                                                                    Our vision is clear: we aspire to be “Créateurs de conviv-     with each and every colleague from around the world.
                                                                    ialité”. Our entrepreneurial culture, the exceptional com-     This is the roadmap that I will continue to follow with
                                                                    mitment of our people, our portfolio of premium brands         confidence and determination.
                                                                    and our value creation strategy are all invaluable assets      As an organization we have reached an inflection point in
                                                                    that we aren’t about to change. They are our DNA.              our race, our Lap 45. We will keep up the pace and con-
                                                                    Changing our ways of working to win the race is more           tinue reinventing our ways of working, to stay the course
                                                                    about re-evaluating our attitude and our collective way of     and ultimately win the race. This, in essence, is the story
                                                                    embracing the changes. The Pernod Ricard “mindset”, as         told in the pages of this annual report. I hope that you
                                                                    I call it, is what will make us more agile and proactive.      enjoy reading it.
Inspiring action - Pernod Ricard
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C AT C H I N G U P W I T H A L E X A N D R E R I C A R D                                                                                          PERNOD RICARD                                                             ANNUAL REPORT 2016/2017
                                                                                                                                                                                                                                                                             6




                                #365 DAYS ON THE GROUND                                                                                                          INDIA ROLLS OUT
                                                                                                                                                                                                                  NOVEMBER
                                                                                                                                                                                                                    2016
                                                                                                                                                                                                                                  NEW YORK
                                 WITH ALEXANDRE RICARD                                                                                                           THE RED CARPET                                                  ABSOLUT ELYX
                                                                                                                                                                                                                               POP-UP STORE AND
                                                                                                                                                                                                                                USA MEDIA TOUR
             In order to stay connected with our employees, and interact and share
          with our communities and our partners… I spend nine months out of the year
                         out on the ground, travelling all over the world.

                                                                                                                                                           Reviewing our business performance
                                                                                                                                                           with our teams in the Group’s second larg-             DECEMBER
                                                           ALEXANDRE              RICARD                                                                   est market; followed by a tour with the                  2016
                                                                                                                                                           Operations Division staff of Pernod Ricard
                                                           Chairman & Chief Executive Officer                                                              India’s Nashik distillery. Their hospitality is
                                                                                                                                                                                                                             Inauguration of the Absolut Elyx pop-up
                                                                                                                                                           something to behold!
                                                                                                                                                           #Operational Efficiency #India
                                                                                                                                                                                                                             in Bryant Park to kick off the start of the
                                                                                                                                                                                                                             holiday season and the annual Christmas
                                                                                                                                                                                                                             Party at Pernod Ricard USA with around
                                                                                                                                                                                                                             sixty journalists for a review of the market.
                                                                                                                                                                                                                             #Route-to-Market/Consumer #USA #Big Bets
                                @alexandrericard
                                                                                                   MEDIA TOUR                                                                                                                #Innovation #USA


                                                                                                IN NEW YORK CITY
               Alexandre Ricard maintains his own social                                                                                                   OPN MAKES A SPLASH
               media accounts. Follow him on LinkedIn,
               Instagram and Facebook.
                                                                                                                                                              IN LAS VEGAS
                                                                                                                                                           Opn, the world’s first connected cocktail
                                                                                                                                                           library, was developed by the Breakthrough                            SMOOTH AMBLER,
                                                                       SEPTEMBER
                                                                                                                                                           Innovation Group (BIG) – an in-house
                                                                                                                                                           start-up dedicated to finding disruptive                                A NEW CRAFT
                                                                          2016
                                                                                                                                                           innovations. Opn made its public debut at
                                                                                                                                                                                                                  JANUARY
                                                                                                                                                                                                                    2017          SPIRIT FOR OUR
                                                                                                                                                                                                                                    PORTFOLIO
                                                                                                                                                           the Consumer Electronics Show in Las
                   THE “BAL JAUNE”                                                                                                                         Vegas (USA), which attracted more than

                       HONORS                                                             Interview on the Fox Business channel
                                                                                          to talk about our annual performance
                                                                                                                                                           170,000 visitors.
                                                                                                                                                           #BIG #CES #Convivialité #USA
                  CLÉMENT COGITORE                                                        and prepare a #martini live on camera!
                                                                                          #bestjobintheworld.
               The 18th annual Ricard Foundation Prize that                               #Digital Acceleration #Convivialité #Consumer Centric
                                                                                          #USA
               took place at the Salomon de Rothschild
               Hotel in Paris in the presence of the French             OCTOBER
               Minister of Culture, Ms Audrey Azoulay, was               2016
               awarded to Clément Cogitore. Cogitore, who                                                                                                              CUBA LIBRE
               has been cited as the most representative
               artist of France’s emerging art scene in 2016,
               had one of his works of art purchased by                                    PREPARING FOR THE
               the Group and, in turn, lent to the Centre
               Pompidou where it will be on exhibition.
                                                                                           CHINESE NEW YEAR
               #Fiac #Friends #Ricard #France
                                                                                                                                                                                                                             As the new majority shareholder in Smooth
                                                                                                                                                                                                                             Ambler Spirits Co., an up-and-coming dis-
                                                                       NOVEMBER
                                                                                                                                                                                                                             tillery based in West Virginia (USA), we’re
                                                                         2016
                                                                                                                                                                                                                             reaffirming our strategy of partnering with
                                                                                                                                                           Celebrating the 10 th anniversary of the                          promising brands and entrepreneurs who
                                                                                                                                                           world’s largest aged rum distillery in                            share our passion for authenticity and high
                                                                                                                                                           San José de las Lajas, Cuba. The design                           quality – such as Smooth Ambler’s Old
                                                                                                                                                           of this exceptional, modern facility, which                       Scout Single Barrel Bourbon, which was
                                                                                                                                                           complies with the most stringent environ-                         recently crowned the World’s Best Single
                                                                                          A reunion with the Pernod Ricard China staff                                                                                       Barrel Bourbon at the World Whiskies
                                                                                                                                                           m e n t a l st a n d a rd s , w a s ove rs e e n b y
                                                                                          in Shenzhen to prepare for the Chinese New                                                                                         Awards, sponsored by Whisky Magazine.
                                                                                                                                                           Don José Navarro, Havana Club’s Primer
                                                                                          Year, a critical business opportunity for our                                                                                      #Active Portfolio Management #M&A #USA
                                                                                                                                                           Maestro Ronero.
                                                                                          Asian workforce.                                                 #Tradition #Operational Efficiency #Celebration
                                                                                          #RTM-C #CNY #China                                               #Cuba
Inspiring action - Pernod Ricard
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C AT C H I N G U P W I T H A L E X A N D R E R I C A R D                                                                       PERNOD RICARD                                                 ANNUAL REPORT 2016/2017
                                                                                                                                                                                                                                                   8




                        @alexandrericard


                                                                  JANUARY                                                                                                              JUNE
                     ERASMUS                                        2017
                                                                                     LONDON ON                                              SUMMER PARTY                               2017
                                                                                                                                                                                               RESPONSIB’ALL DAY:
                 RESPONSIBLE PARTY                                                  BLOOMBERG TV                                                AT THE                                             “LET’S LIVE
                                                                                                                                           CENTRE POMPIDOU                                     TOGETHER, BETTER”
                                                                                                                                                                                              7th annual Responsib’ALL Day, 103 commu-
                                                                                                                                                                                              nity initiatives led by 18,442 employees
                                                                                                                                                                                              across the globe: “Créateurs de convivialité“
                                                                                                                                                                                              determined to “live together, better”.
                                                                  FEBRUARY                                                                                                                    #S&R #Supporting Local Communities
                                                                    2017



                                                                             A live interview in London on Bloomberg TV
               Off to Brussels with Christian Porta,                         to talk about our half-year results. Despite
               Chairman and CEO of Pernod Ricard EMEA/                       an unstable environment, we expect to
               LATAM, to renew our partnership with the                      continue improving our annual perfor-
               Erasmus Network’s Responsible Party pro-
               ject for the 7th consecutive year. Since 2010,
                                                                             mance, in line with the roadmap we
                                                                             announced to the markets in 2015. Our
                                                                                                                                                                                               BIENVENIDOS EN LA
               Responsible Party has expanded to 32 coun-                    objective for 2016/2017: an organic growth
                                                                                                                                        Celebrating 20 years of patronage of the
                                                                                                                                        Centre Pompidou. Pernod Ricard’s annual
                                                                                                                                                                                              FAMILIA DEL MAGUEY
               tries and has hosted nearly 500 “responsible                  in Profit from Recurring Operations between
                                                                                                                                        evening event brought together 2,000
               parties” throughout Europe, spreading its                     2% and 4%.
                                                                                                                                        employees, partners and clients on the
               message of convivial – and therefore respon-                  #Performance #England
                                                                                                                                        Centre Pompidou’s Paul Ricard Terraces.
               sible – drinking to 330,000 students.
                                                                                                                                        Proud to support cutting-edge artists.
               #Millennials #Responsible Drinking #Belgium
                                                                                                                                        #20 years #Patronage Centre Pompidou #Summer
                                                                                                                                        Party #Convivialité #France

                                                                   MARCH


                      330,000
                                                                   2017



                        STUDENTS REACHED TO RAISE
                       AWARENESS OF THE IMPORTANCE
                                                                                 BUSINESS UPDATE                                                                                              Following the acquisition of a majority
                          OF “CONVIVIAL” DRINKING
                              IN 32 COUNTRIES
                                                                                 WITH OUR TEAMS                                              CHIVAS VENTURE
                                                                                                                                                                                              stake in the high-end mezcal Del Maguey
                                                                                                                                                                                              Single Village, this new Prestige product
                                                                                  IN NEW YORK                                                    SINGLES                                      is joining the Pernod Ricard fold. A leading
                                                                                                                                                                                              producer of artisanal mezcal, it is also
                                                                                                                                               OUT SOCIAL                                     the number one brand in its category in the
                                                                                                                                             ENTREPRENEURS                                    United States.
                                                                                                                                                                                              #Active Portfolio Management #M&A #USA



                   NEW ZEALAND,
                A VISIT TO OUR STAFF
                    AFFECTED BY                                                                                                                                                                  FIRST BIRTHDAY
                  THE EARTHQUAKE                                             An opportunity to talk with Pernod Ricard                                                                         CANDLE FOR TAKE OFF
                                                                             North America CEO Paul Duffy and the New
                                                                             York staff.                                                                                                         AT THE INSTITUT
                                                                             #USA #New Organisation #Performance #USA                                                                           OCÉANOGRAPHIQUE
                                                                                                                                                                                                   PAUL RICARD
                                                                                                                                                                                              Launched in 2016 to coincide with the 50th anni-
                                                                                                                                        The third edition of the Chivas Venture               versary of the Institut Océanographique Paul
                                                                                                                                        competition awarded a total of USD 1 mil-             Ricard, Take OFF, a scientific sponsorship pro-
                                                                   APRIL                                                                lion to innovative start-ups whose projects           ject aimed at supporting young researchers
                                                                   2017              #TOKYO,                                            were designed to create a better world.               working to preserve our oceans, celebrated
               In the wake of the violent earthquake that
               struck near Christchurch on the country’s                          GARDEN OF EDEN                                        Congratulations to the 2017 winner Neil
                                                                                                                                        Peetachai Dejkraisak, a social entrepreneur
                                                                                                                                                                                       JULY
                                                                                                                                                                                       2017
                                                                                                                                                                                              its first anniversary. The event was hosted by
                                                                                                                                                                                              Patricia Ricard and included numerous repre-
               South Island, the current priority for our staff              L’Eden by Perrier-Jouët returns to Tokyo – a               from Thailand who developed Jasberry,                 sentatives from the scientific world, major insti-
               from Pernod Ricard Winemakers, alongside                      proven success story for digital art. With this            a new organically grown rice. His mission:            tutions and the community at large, all of whom
               with our local communities, is to assess the                  new edition of L’Eden by Perrier-Jouët, digi-              end poverty among small-scale farmers                 are committed to protecting the world’s oceans.
               damage and focus on rebuilding or our vine-                   tal art was the primary medium for the art-                by giving them access to the global agricul-          Organizers announced that the first “Bal Bleu”
               yards. Commitment and courage.                                work commissioned especially for the event.                tural market. #Brands #Positive Impact                would be held in Deauville on 26 August 2017,
               #S&R #Supporting Local Communities #Mindset                   #Luxury #Building Passion Brands #Japan                    #Building Passion Brands #Entrepreneurship            with support from the Barrière Groupe.
               #New Zealand
                                                                                                                                                                                              #S&R #Sponsorship #IOPR #France
Inspiring action - Pernod Ricard
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                              PERNOD RICARD                                   ANNUAL REPORT 2016/2017
                                                                                                         10




                                                 HOW
                                               WE CREATE
                                                VALUE
                                                  Pernod Ricard is committed to creating
                                               long-term value through a lasting partnership
                                                        with all of its stakeholders.




ELNA     NORDSTRÖM

Product Development Manager




   THE ABSOLUT COMPANY
         SWEDEN
Inspiring action - Pernod Ricard
13
INSPIRING ACTION                                                                                                    H O W W E C R E AT E VA L U E   PERNOD RICARD                                                                             ANNUAL REPORT 2016/2017
                                                                                                                                                                                                                                                                                                                    12




                                           THE PERNOD RICARD                                                                                                               … MAKING OUR EMPLOYEES
                                               MINDSET…                                                                                                                   OUR PRIMARY GROWTH DRIVER
                                      Pernod Ricard’s success is rooted in the exceptional commitment of
                                 its 18,442 employees, whose energy and talents embody the Group’s values
                                and enliven its culture. Their commitment is the result of a winning mindset,
                                        the Pernod Ricard Mindset. This truly competitive advantage is                                                                                                        ENTREPRENEURIAL
                                       what provides the Group the speed and agility it needs to achieve                                                                                                           SPIRIT
                                               success in an increasingly volatile environment.
                                                                                                                                                                                                                Our founders instilled a spirit
                                                                                                                                                                                                           of entrepreneurialism at the heart of
                                                                                                                                                                                                        Pernod Ricard’s identity and decentralised
                                                                                                                                                                                                           model, which continues to guide each
                                                                                                                                                                                                         of our affiliates today. The Pernod Ricard
                                                                                                                                                                                                           Mindset is marked by independence,
                                                                                                                                                                                                       initiative, boldness and an appetite for risk.
                                                                                                                                                                                                       It combines the mentality of a start-up with
                                                                                                                                                                                                      the institutional strengths of a large company
                                                                                                                                                                                                        that provides resources, overall coherence
                                                                                                                                                                                                           and strategic alignment to sustain it.

                                                                                                                                                               A MODEL                                            MUTUAL TRUST                                                  AN ATTITUDE
                                                                                                                                                            DECENTRALISATION                            Trust provides a stable base for a dialogue                                      CONVIVIALITÉ
                                                                                                                                                                                                              that is simple, honest and direct.
                                                                                                                                                     We are committed to maintaining                     It gives employees the freedom to launch                         Our decentralised organization
                                                                                                                                                           our affiliates’ operating                        initiatives, confident of support from                          and our three cardinal values
                                                                                                                                                     autonomy, based on the principle                   their managers, and it ensures their right                        achieve their full potential when
                                                                                                                                                         of subsidiarity. This policy                 to fail and learn from that experience as well.                        they are animated by a spirit
                                                                                                                                                       ensures that decisions can be                        This mutual trust, closely intertwined                         of convivialité, Pernod Ricard’s
                                                                                                                                                        made as closely as possible                        with the principles of decentralisation                           trademark to accomplishing
                                                                                                                                                      to each market and that we can                            and entrepreneurialism, is key                             its goals. Such single-minded
                                                                                                                                                          respond more quickly to                                   to the Group’s success.                               dedication to a mission at every
                                                                                                                                                      customer and consumer needs.                                                                                           level of the company is what
                                                                                                                                                       “Our products are distributed                                                                                            gives Pernod Ricard its
                                                                                                                                                          by our men and women.”                       A STRONG SENSE OF ETHICS                                          distinctive character as a Group.
                                                                                                                                                               Patrick Ricard                                                                                                We encourage simple, direct
                                                                                                                                                                                                        Mutual trust is impossible without respect                              relationships among all
                                                                                                                                                                                                        and transparency. We strive to ensure that                       hierarchical levels, this openness
                                                                                                                                                                                                        every employee has a positive relationship                          to sharing ideas nurtures our
                                                                                                                                                                                                      with all stakeholders, whether shareholders,                            collective commitment and
                                                                                                                                                                                                      customers, consumers, colleagues, suppliers                        promotes our vision of becoming
                                                                                                                                                                                                        or competitors, and that they comply with                        true: “Créateurs de convivialité”.
                                                                                                                                                                                                       our social and environmental commitments.
                                                                                                                                                                                                        Those commitments are conveyed through
                                                                                                                                                                                                          the policies and procedures set out in
                                                                                                                                                                                                          the Pernod Ricard Charter and in our
                                                                                                                                                                                                       Code of Business Conduct and Commercial
                                                                                                                                                                                                                 Code of Communications.




RESULTS OF THE I SAY SURVEY                                                                                                                          RESULTS OF THE I SAY SURVEY –
(JUNE 2017)                                                  94%                             95%                          88%                        SUSTAINABILITY & RESPONSIBILITY                               92%                              85%                                       83%
                                                                                                                                                     POLICY (JUNE 2017)
In June 2017 we conducted our fourth biennial            94% of our employees are proud   95% wholeheartedly share    88% say they feel a sense      The results of the I Say survey demonstrated              92% of our employees believe     85% of our employees declare that         83% of our employees are
I SAY survey, a global opinion barometer that            to work for Pernod Ricard        the Group’s values          of commitment                  that our employees both understand and adhere             that their company is socially   they are encouraged to act responsibly    well aware of Pernod Ricard’s
drew an exceptional response rate of 82%.                                                                                                            to our Sustainability & Responsibility policy:            responsible in the community     and to conduct their activities           Sustainability & Responsibility
Source: Willis Towers Watson.                                                                                                                                                                                                                   in line with our Sustainability           model and its 4 areas of
                                                                                                                                                                                                                                                & Responsibility engagements              engagement
Inspiring action - Pernod Ricard
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                                          GENERATING VALUE                                                                                                                                               … BECAUSE SUCCESS MEANS
                                       FOR LONG-TERM GROWTH…                                                                                                                                            NOTHING UNLESS IT IS SHARED
                                Pernod Ricard has dedicated itself to striking a consistent balance between                                                                                  Pernod Ricard keeps an open ongoing dialogue with             A three-step methodology:
                               business efficiency, community well-being and protection of the environment.                                                                                  its stakeholders in order to best meet their expecta-         • The principal S&R issues are identified through an
                                                                                                                                                                                             tions. Its Sustainability & Responsibility (S&R) strategy     in-depth analysis of information provided by the S&R
                           That commitment draws its strength from three principles: adopting an approach that
                                                                                                                                                                                             is based on identifying, understanding and prioritizing       officers at each of the Group’s affiliates.
                              is a direct outgrowth of our vision and fully consistent with our strategic model;                                                                             the social and environmental issues raised in that            • External stakeholders rank the identified issues in order
                           mobilising our entire workforce to serve as front-line ambassadors of our responsible                                                                             dialogue, and enhancing its ability to generate value         of priority, based on the importance of those issues to be
                                commitments; and ensuring that the Human Resources and Sustainability &                                                                                      in the short, medium and long term. We believe that           addressed by a major company such as Pernod Ricard, and
                           Responsibility Director is represented at the highest level of the company, by serving                                                                            value can only be generated over time if it is beneficial     internal stakeholders rank the issues based on their current
                                      as a member of the Executive Board and the Executive Committee.                                                                                        to all of our stakeholders. Success means nothing             and potential impact on the Group’s business activities.
                                                                                                                                                                                             unless it is shared.                                          • The Executive Board thoroughly reviews and validates
                                                                                                                                                                                             During the 2016/2017 fiscal year, the Group unveiled          the matrix.
                                                                                                                                                                                             its materiality matrix – the result of a lengthy process      The materiality matrix highlights the initiatives on which
                                                         PERNOD RICARD HAS DEVELOPED AN S&R MODEL                                                                                            that began with a questionnaire completed by more             the Group needs to concentrate its focus. It will serve as
                                                            BASED ON FOUR AREAS OF COMMITMENT                                                                                                than 1,300 stakeholders: employees, investors, con-           a tool for future dialogue with stakeholders with regard
                                                                                                                                                                                             sumers, public authorities, NGOs and experts.                 to S&R strategy and the actions to be taken.



                    RESPONSIBLE                                                                                                EMPLOYEES
                   CONSUMPTION                                                                                      As frontline ambassadors of our




                                                                                                                                                                                 HIGH
    We promote responsible consumption                                                                         commitments, employees are at the very
 in three principal ways: by targeting at-risk                                                                core of our Sustainability & Responsibility
  behaviors and populations, such as young                                                                        (S&R) model. Our credibility derives
   people and pregnant women; by taking                                                                      from their actions. It is through their efforts
 preventive action via educational programs                                                                   that our S&R model, based on the Group’s                                                                                                                   Product quality
  and direct awareness-raising campaigns                                                                     values – entrepreneurial spirit, mutual trust
  for both customers and suppliers; and by                                                                      and strong sense of ethics – will ensure
      having our affiliates engage closely                                                                              Pernod Ricard’s success.
   with their local communities to address                                                                           94% of our employees are proud to work
          local issues and concerns.                                                                                            for Pernod Ricard
                                                                                                                                                                                                                                                                                       Responsible
     86% of affiliates carried out at least one responsible                                                                                                                                                                                                                             drinking
                drinking initiative in 2016/2017                                                                                                                                                                                               Human rights and
                                                                                                                                                                                                                                                balanced teams




                                                                                                                                                                 PRIORITY ACTIONS EXPECTED
                                                                                                                                                                                                                                                                            Business
                                                                                                                                                                                                                                                                          transparency
                                                                                                                                                                                                                                                                            and ethics


                                                                                                                                                                                                                                                                           Employee
                                                                                                                                                                                                                                                                        development and




                                                                                                                                                                 BY STAKEHOLDERS
                                                                                                                                                                                                                     Agriculture and                                   working conditions
                                                                                                                                                                                                                      biodiversity                Responsible
                                                                                                                                                                                                                                                  purchasing
                PARTNERS AND                                                                                         PROTECTING THE PLANET
                                                                                                                                                                                                                                                                           Climate
              LOCAL COMMUNITIES                                                                                  The Group’s Premium strategy hinges                                                                                                                       change
  By associating its business partners and                                                                    on preserving and passing on the unique                                                                          Water use        Ethical alcohol
   suppliers to its sustainability initiatives,                                                                ‘terroir’ from which each of its brands is                                                                                       communication
    Pernod Ricard has made a long-term                                                                       produced. Fully aware of its responsibilities
commitment to the local communities where                                                                      and the issues at stake for the business,
   the Group does business. The company                                                                             Pernod Ricard has implemented
    is committed to fostering a culture of                                                                       stringent initiatives, embodied in each
  sharing and an ethos of dialogue in these                                                                        affiliate’s action plan, as well as by
                local communities.                                                                            a comprehensive environmental roadmap                                                                                                Packaging
       1,142 suppliers have pledged to comply with                                                                    (see Roadmap 2020, page 64).                                                                                                 and waste
                                                                                                                                                                                                                       Community
     our sustainability principles (as of 30 June 2017)                                                                        Between FY10 and FY17:                                                                  engagement
                                                                                                                        CO2 emissions were reduced by 27%,
                                                                                                                       water consumption fell 17%, and energy
                                                                                                                              use was reduced by 16%




                          A
                                                                                                                                                                                                                                                                                                 	Responsible drinking
                                                                                                                                                                                                                                                                                                   Employees
                                      t the eighth annual Randstad Awards         amongst the companies offering the best work-­life                                                                                                                                                             	Partners and
                                      ceremony, Pernod Ricard was awarded         balance in France. The Randstad Award also                                                                                                                                                                       communities
                                                                                                                                                                                                                                                                                                   Protect the planet
                                      the 2017 Randstad Award, based              recognized the Group for an array of other Group-
                                      on the results of the “Employer Brand       level initiatives: the Youth Action Council (YAC)
                                      Research powered by Randstad”               think tank, its wide range of graduate programs,
                           survey. The poll’s findings echo those of the inter-   the campaign to promote cross-disciplinary activ-
                           national survey conducted by the US company            ity (the “80/20 rule”) and its substantial investment                                                      MODERATE                                FOCUS ACTIONS                                                                HIGH
                           Glassdoor, which compiled feedback from employ-        in employee training with the creation of Pernod
                           ees themselves. They ranked Pernod Ricard              Ricard University’s first campus (see page 70).                                                                                                    FOR PERNOD RICARD
Inspiring action - Pernod Ricard
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                                                 A SINCERE                                                                                                                                                   RESPONSIB’ALL DAY
                                                                                                                                                                                                                2 JUNE 2017
                                                COMMITMENT                                                                                                                               7th annual Responsib’ALL Day, 103 community initiatives led
                                                                                                                                                                                      by 18,442 employees; real “Créateurs de convivialité” determined
                                                                                                                                                                                                          to “live together, better”.


                                                                                                                                                                                      #S&R #SUPPORTING LOCAL COMMUNITIES




                                                     ALEXANDRE             RICARD

                                                    Chairman & Chief Executive Officer



                                                                                                                                                      1




         T
                         he commitment to sustainable develop-           our partners, therein lies the challenge that I want each
                         ment is sometimes still considered a sim-       of our brands to take up. It’s what we have named Brand
                         ple prerequisite: how many institutions,        Positive Impact. The Chivas Venture project embodies
                         companies and organisations refer to their      this perfectly, supporting social entrepreneurs with a
                         commitments when talking about their            vision to create a better world for all.
                         business without placing even one of those      If we speak now of “ambition”, of wanting to become the
         commitments at the heart of their ambition? We will only        leader tomorrow, then we must set an example – and live
         have the opportunity to create a better world together if       by that example – today. A leader drives the sector
         we are truly convinced of the genuine need to integrate         upwards and opens the way for others. It is therefore only                                                                                                            4
         social responsibility as a fundamental and sincere part of      natural that we have placed this principle at the heart of
         our strategy.                                                   our strategy: social responsibility is one of the 4 corner-
         This is what we strive to do at Pernod Ricard. Sustainable      stones of our strategic model. It is with this in mind that,
         development is of vital importance as it is intrinsically       in 2016, we committed to the Sustainable Development                         2
         linked both to our vision of being “Créateurs de convivia-      Goals laid down by the United Nations Declaration of
         lité”, and to our ambition which results from it: leader-       September 2015. We encourage all our stakeholders to
         ship. It’s etched in our DNA, it’s a part of our history.       join us in this collective action. Our commitments are far
         Building consistently over time is one of the major chal-       from new, and I would like to take this opportunity to
         lenges of social responsibility. That long-term vision is       reaffirm our support for the CEO Water Mandate and the
         deeply rooted in my family, built on the heritage handed        10 fundamental principles of the United Nations Global
         down to us by my grandfather, and it’s a philosophy we          Compact, as we pursue our objective of achieving
         try to live by on a daily basis. Just one example is the        “advanced” status.
         Paul Ricard Oceanographic Institute, founded more than          Finally, it is not enough to be sincere, for our societal
         50 years ago. Durability, patrimony and transmission are        approach to be tied to our vision, our ambition or our
         important to us. We have no time for short-term, quick-         strategy. It must, above all, be alive in the hearts of our
         fix solutions: we need meaning.                                 people. They are the front-line ambassadors of our cred-
         If we speak of a vision, of being “Créateurs de convivia-       ibility: if they do not adhere to our approach, we cannot
         lité”, it’s because we believe that “sustainable value” can     hope to convince anyone. For that reason, raising aware-
         only truly exist when it’s created for the benefit of all. We   ness among our people remains central to our commit-
         have a strong conviction: success tastes better when            ments: promoting responsible drinking, protecting our
         shared, which is reflected in our tagline, “let’s live          planet and developing our local communities. I would
         together, better.” There can be no conviviality without         therefore like to express my sincere thanks to each and
         sharing, and no conviviality without responsibility.            every one of my colleagues who have made these com-
         Creating a positive impact in our communities and with          mitments a daily reality at Pernod Ricard.                                   3                                                                                        5



                                                                                                                                                      1 Pernod Ricard China   2 Pernod Ricard Headquarters   3 Pernod Ricard Deutschland   4 Pernod Ricard USA   5 Pernod Ricard USA
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                               A DYNAMIC BRAND                                                                                                                              … TAILORED TO
                                  PORTFOLIO…                                                                                                                              LOCAL CONDITIONS
                         We have one of the most comprehensive portfolios in the market.
                Since its inception, Pernod Ricard has built a unique portfolio of Premium brands
                with international reach, encompassing every major category of wines and spirits.
                       A portfolio governed by our House of Brands, a dynamic management
                 tool used to organise the portfolio into market segments based on each brand’s
                  growth potential for the most promising moments of consumption. It ensures
                             that our resources are allocated as effectively as possible.




                                                                                                                                                           LECERCLE                                           INNOVATION:
                                                                                                                                               FOR CAPTURING THE LUXURY MARKET                         OUR KEY TO FUTURE GROWTH
                                 S T R A T E G I C   I N T E R N A T I O N A L   B R A N D S
                                                                                                                                                  We are counting on our LeCercle portfolio of     Historically a strategic resource for the Group,
                                                                                                                                                     Prestige spirits and champagne to help           innovation is helping to ensure our future
                                                                                                                                                 us continue gaining market share in the luxury      growth, through services, experiences and
                                                                                                                                                segment. These brands, targeted to an exclusive     customised products. Each market identifies
                                                                                                                                                   clientele, require a very specific sales and    the most promising innovations on the basis of
                                                                                                                                                marketing strategy, one that includes a presence       specific criteria: a value proposition for
                    +                                         +                                                                                        in the most iconic establishments,          the consumer, a response to consumer needs,
                                                                                                                                                      unique storytelling, and a customised               or market potential – with return
                                                                                                                                                            consumption experience.                        on investment as a key factor.




             L U X U R Y                               INNOVATION                              STRATEGIC WINES




                                                                                                                                                              STRONG,                                      A GLOBAL MARKET
                                                                                                                                                       STRATEGIC LOCAL BRANDS                         FOR DIVERSE REGIONAL WINES

                                                                                                                                                       Strategic local brands are crucial:                Four of our brands in this category
                                                                                                                                                 they respond to the needs of local consumers       receive priority attention. Our next challenge
                                                                                                                                                   in a way that global brands cannot match.           is to create a global market for a range
                                                                                                                                                 Often the leaders in their market, they ensure      of wines from multiple regions – Australia,
                                                                                                                                                      a strong local footprint in numerous                 New Zealand, Spain and the USA.
                                                                                                                                                        strategic markets for the Group.




                                         S T R A T E G I C   L O C A L   B R A N D S
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                                     A CONSUMER-CENTRIC                                                                                                                                                                      … FOR ACCELERATED
                                         STRATEGY…                                                                                                                                                                               GROWTH



                                              4 ESSENTIALS                                                                                                                                                                                                           4 ACCELERATORS
                                        OPERATIONAL EXCELLENCE                                                                                                                                                                                                  PORTFOLIO MANAGEMENT
                                                                                                                                                              ENTRIC A
                                               Reduce complexity &                                                                                       MER-C        PP                                                                           Position one of our brands at each and every shared
                                                 foster efficiency.                                                                                    SU               RO
                                              SEE ALSO | SUPPLY CHAIN → P.64                                                                         ON                                                                                              moment of celebration, rooted in local realities.
                                                                                                                                                                                                                                                                    SEE ALSO | PORTFOLIO MANAGEMENT → P.62




                                                                                                                                                                                              AC
                                                                                                                                            C
                                                                                                                                         A




                                                                                                                                                                                                H
                                         TALENT DEVELOPMENT                                                                                                                                                                                                 PREMIUMISATION AND LUXURY

                                                 Recruit, retain &                                                                                                                                                                                         Premiumize the portfolio & strengthen
                                              develop diverse teams.                                                                                                                                                                                      our position as the leader in luxury spirits.
                                       SEE ALSO | PERNOD RICARD UNIVERSITY → P.70                                                                                                                                                                                   SEE ALSO | L’EDEN BY PERRIER-JOUËT → P.54



                            SUSTAINABILITY & RESPONSIBILITY (S&R)                                                                                                                                                                                                            INNOVATION

                                              Lead the industry in                                                                                                                                                                                             Create brand experiences through



                                                                                                                                                     M




                                                                                                                                                                                     TÉ
                                         sustainability & responsibility.                                                                                M                               LI
                                                                                                                                                                                                                                                                  new products and services.


                                                                                                                                                      O
                                                                                                                                                             EN                      A
                                                                                                                                                                                 IVI
                                           SEE ALSO | THE CHIVAS VENTURE → P.56                                                                                                                                                                                         SEE ALSO | ABSOLUT LIME → P.48
                                                                                                                                                                  TS
                                                                                                                                                                       OF CONV
                                 ROUTE-TO-MARKET/CONSUMER                                                                                                                                                                                                           DIGITAL ACCELERATION

                       Capitalize on our many different distribution channels                                                                                                                                                                                 Accelerate the integration of digital
                       in order to reach all of our customers and consumers.                                                                                                                                                                                        into everything we do.
                                                SEE ALSO | MARTELL → P.46                                                                                                                                                                                             SEE ALSO | TRAVEL RETAIL EMEA → P.72




    OUR STRATEGIC MODEL EXPLAINED IN 4 POINTS
        1. BECOME  THE LEADER IN THE
           WINE & SPIRITS INDUSTRY                                                2. PUTTING CONSUMERS AT
                                                                                     THE HEART OF OUR STRATEGY                                                                                 3. FOUR “ESSENTIALS” BUILT
                                                                                                                                                                                                  ON OUR HISTORIC FUNDAMENTALS                                           4. FOUR “ACCELERATORS”
                                                                                                                                                                                                                                                                            FOR CAPTURING GROWTH

         This ambition, reaffirmed by Alexandre Ricard, stems from our            Today’s consumers are no longer loyal to one brand, they have a                                              • Operational Excellence: streamline our procedures in order to           • Portfolio Management: pair the most appropriate brand with
         vision of being “Créateurs de convivialité”. It serves as a call to      repertoire of brands; they choose the products that they consume                                             take action more quickly and more nimbly.                                 each consumption occasion.
         action for all of our employees to position one of our brands at each    based on the moment of consumption, including when, where,                                                   • Talent Development: capitalize on our corporate culture to fos-         • Premiumization and Luxury: encourage consumers to move
         and every shared moment of celebration – the goal being to turn          how and with whom they are consuming a product. Everything we                                                ter our employees’ development and attract new talent.                    upmarket, and capture the luxury market.
         that moment into an experience of convivialité. In achieving this        do revolves around that quest for satisfaction. Our strategic                                                • Sustainability & Responsibility (S&R): enlist the support of our        • Innovation: develop new services, experiences and products to
         goal, Pernod Ricard will inevitably become the leader of the wine        model is built on four “Essentials” which are the Group’s long-                                              brands to ensure long-term growth.                                        ensure future growth.
         & spirits industry.                                                      time fundamentals, and leverages on four growth “Accelerators”.                                              • Route-to-Market/Consumer: boost our brands across every                 • Digital Acceleration: build a direct relationship with our
                                                                                                                                                                                               distribution channel.                                                     consumers.
23
                                                                                                  22




        #2     WORLDWIDE
            IN WINE & SPIRITS




        16          BRANDS
 AMONG THE TOP 100 WORLDWIDE
Source: Impact Databank 2016, published in March 2017




         #1      WORLDWIDE
   IN PREMIUM, ULTRA-PREMIUM
          AND PRESTIGE SPIRITS
Source: Impact Databank 2016, published in March 2017




                                                              JASON       WHALLEY

                                                        Global Senior Brand Manager, Innovation




                                                             PERNOD RICARD WINEMAKERS
                                                                     AUSTRALIA
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                    A DECENTRALIZED GLOBAL                                                                                                                                        AN ENTREPRENEURIAL
                 ORGANISATION TO REMAIN AGILE                                                                                                                                   AND RESPONSIBLE MINDSET
                          The Group’s organizational structure is based on one guiding principle:
                       decentralization. This provides a genuine competitive advantage in that it that
                                                                                                                                                                         1975-2017: MILESTONES IN THE GROUP’S HISTORY
                          it provides the Group with greater agility and flexibility to respond more
                         quickly to customer and consumer needs in a highly volatile environment.
                    It also ensures that decisions are made so as to reflect local market expectations
                         as closely as possible. Our organization is built around three components:
                                  Headquarters, Brand Companies and Market Companies.




                                      PERNOD RICARD HEADQUARTERS


          THE ABSOLUT                                                                                           PERNOD RICARD
            COMPANY                                                                                             NORTH AMERICA                                   1975                                     1988                                      1989                                  1993
                                                                                                                                                         Pernod Ricard Group                   Acquisition of the leading                 Acquisition of the Orlando            Joint venture formed with
       CHIVAS BROTHERS                                                                                          PERNOD RICARD                                established                        Irish whiskey producer,                       Wyndham Group                     Havana Club International
                                                                                                                 EMEA/LATAM(1)                                                           Irish Distillers – owner of Jameson
        MARTELL MUMM
        PERRIER-JOUËT
                                         BRAND                                         MARKET                PERNOD RICARD ASIA

        IRISH DISTILLERS               COMPANIES                                      COMPANIES                    PERNOD SA

        PERNOD RICARD                                                                                               RICARD SA                                                                                                                     2007
         WINEMAKERS                                                                                                                                                                                                                          Commercial Code
                                                                                                                PERNOD RICARD                                                                                                           of Communications adopted
         HAVANA CLUB                                                                                            GLOBAL TRAVEL                                   2001                                     2005                                                                            2008
        INTERNATIONAL                                                                                              RETAIL
                                                                                                                                                   Acquisition of a stake in Seagram’s       Acquisition of Allied Domecq                                                        Acquisition of Vin&Sprit,
                                                                                                                                                        Wine & Spirits business                                                                                                  owner of Absolut vodka




            BRAND                             PERNOD RICARD HEADQUARTERS                                           MARKET                                                                                2011
          COMPANIES                                                                                               COMPANIES                                                                                                                        2012
                                        As the driver of the Group’s activities, Headquarters defines                                                                                       Launch of Responsib’ALL Day,
    Based in the home country of        and coordinates the overall company strategy and oversees        The 86 Market Companies are each                                                        a global annual event                   Signing of five Wine & Spirits
  each brand, the Brand Companies          its implementation and verify that the affiliates comply       linked to a region (Pernod Ricard                                                 devoted to social responsibility          industry commitments to promote
    are responsible for developing               with corporate procedures and commitments.               Asia, Pernod Ricard EMEA/LATAM
                                                                                                                                                                                              in which the Group’s entire
                                                                                                                                                                                                 workforce takes part
                                                                                                                                                                                                                                           responsible consumption                       2014
     the overall strategy for their          As part of an ongoing focus on operational efficiency        or Pernod Ricard North America),
                                                                                                                                                                                                                                                                                 Acquisition of a majority
     respective brands, as well as                   and cost-effectiveness, Headquarters is               with the exception of the Group’s
                                                                                                                                                                                                                                                                              stake in Avión Premium tequila
   activation solutions that can be           also responsible for allocating resources to ensure        two founding Market Companies in
      implemented by the Market                   optimal impact and consistency Group-wide.              France, Pernod SA and Ricard SA,
     Companies at the local level.                In addition, Headquarters is responsible for:           which are directly represented on
     They are also responsible for       • governance functions (Strategy, Mergers & Acquisitions,        the Executive Committee. Tasked
   production and management of
       their industrial facilities.
                                               Finance, Legal Affairs, Corporate Communication,
                                        Talent Development, Corporate Social Responsibility, etc.);
                                                                                                            with implementing the Group’s
                                                                                                           strategy and key policies in their
                                                                                                                                                                         YEARS
                                           • dissemination of best practices and cross-functional          respective markets, the Market
                                              initiatives with high added value (digital marketing,          Companies’ role is to activate                         OF CONVIVIALITÉ
                                       luxury, innovation, etc.) via the Global Business Development       the Group’s international brand
                                                                                                                                                                                                         2016
                                         entity – which regroups the Marketing and Sales divisions;        strategies at the local level and                                             – Acquisition of a majority stake in Black                                    2017
                                                   • support resources (supply chain, IT, etc.).            manage the local and regional                       2015                       Forest Distillers GmbH, owner of the
                                                                                                               brands in their portfolio.                                                 Super-Premium gin brand Monkey 47                  Acquisition of a majority stake in Smooth Ambler, producer
                                                                                                                                                       Pernod Ricard celebrates          – Institut Océanographique Paul Ricard               of Premium bourbons, and in Del Maguey Single Village,
                                                                                                                                                          its 40th anniversary                celebrates its 50th anniversary                         the leading producer of artisanal mezcal


                                                     (1) Europe, Middle East, Africa and Latin America
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                                     PERNOD RICARD ACROSS THE GLOBE
                          Pernod Ricard operates in most countries of the world, primarily through
                             its 86 direct affiliates. Our revenue distribution is equally balanced
                               across our three regions, with 30% of our sales in the Americas,
                                   40% in Asia and the rest of the world and 30% in Europe.                                                                                                                            EMEA/LATAM




                                NORTH AMERICA                                                                                                       Irish Distillers
                                                                                                                                                                                                 The Absolut Company

                                                                                                                                                              Chivas Brothers

                                                                                                                                                                                Global Travel Retail

                                                                                                                                                                                 Pernod Ricard EMEA/LATAM
                                                                                                                                                      Headquarters               Martell
                                                                                                                                                                                 Mumm
                                                                                                                                                                                 Perrier-Jouët




                                                                                                                                                                       Société Pernod
                                                                                                                                                                       Société Ricard

SEGMENTATION                                                                                           Pernod Ricard North America
WORLDWIDE
                                                                                                                                                                                                                                                                                       Pernod Ricard Asia

EMEA/LATAM

                                                                                                                           Havana Club
                                                                                                                           International
NORTH AMERICA
                                                                                                                                                                                                                                                    ASIA

ASIA

                                                                                                                                                                                                                                                                                                        Pernod Ricard
                                                                                                                                                                                                                                                                                                        Winemakers
REGIONS WHERE PERNOD RICARD
IS NOT ESTABLISHED



                                                                EMEA/LATAM
OUR GEOGRAPHIC
SEGMENTATION
As of 1 July 2016, the geographic perimeters of        • The creation of two new “Management
the Group’s regions were modified in three major       Entities” within Pernod Ricard EMEA/LATAM that
respects.                                              will leverage the Region’s expertise in emerging                                                                HEAD OFFICES                                      HEAD OFFICES                                PRODUCTION SITES
                                                       markets:                                                                                                        BRAND COMPANIES                                   PERNOD RICARD REGIONS                       IN 25 COUNTRIES
• The Pernod Ricard Americas region was sim-           - one with Mexico as Lead Market, together with                                                                Havana - Cuba / Paris - France /                  New York - United States /                  Argentina / Armenia / Australia / Brazil /
plified to focus on its core business: the two major      Colombia, Venezuela and Peru;                                                                                Dublin - Ireland / London -                       Paris, Marseilles, Créteil - France /       Cambodia / Canada / China / Cuba /
North American markets, the United States and          - one with Brazil as Lead Market, together with                                                                United Kingdom / Stockholm - Sweden /             London - United Kingdom /                   Czech Republic / England / Finland /
Canada. Specifically, the goal of this new entity,       Argentina, Uruguay, Paraguay and Chile.                                                                       Sydney - Australia                                Hong Kong - China                           France / Germany / Greece / India / Ireland /
directly represented on the Executive Committee,       • The creation of a Global Travel Retail (GTR) unit                                                                                                                                                           Italy / Mexico / New Zealand / Poland /
is to focus business efforts more intensely on its     that reports directly to Headquarters.                                                                                                                                                                        Scotland / South Korea / Spain / Sweden /
largest market, the US.                                                                                                                                                                                                                                              United States
29
                                                      28




  86MARKET COMPANIES




   6 BRAND COMPANIES




  96
 ACTIVE PRODUCTION SITES
    AS AT 30 JUNE 2017




   3     REGIONS




   1
GLOBAL TRAVEL RETAIL ENTITY




                              JANAINA     BARBOSA

                                 Logistics Analyst




                               PERNOD RICARD BRASIL
                                     BRAZIL
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                     HIGH STANDARDS OF                                                                                              … TO PROTECT THE BEST INTERESTS
                       GOVERNANCE…                                                                                                          OF THE GROUP
                                 BOARD OF DIRECTORS
                                                                                                                                         AND ITS STAKEHOLDERS
                           The Pernod Ricard Board of Directors oversees
                               the Group’s governance in an ethical and
                                transparent manner; at the same time
                          ensuring that the business is managed in the best
                             interests of the Group and its stakeholders.
                              The Board members, who bring together
                          complementary skills and experience, ensure that
                               the Group pursues its business strategy                                              THE BOARD OF DIRECTORS                      ORGANISATION AND                                         2016/2017 ACTIVITY
                            with the primary goal of increasing the value                                           AS OF 1 JULY 2017                           METHOD OF OPERATION
                                                                                                                                                                                                                         Over the course of the 2016/2017 fiscal year,
                                             of the Group.                                                                                                                                                               the Board of Directors met 8 times, with an
                                                                                                                    01. Anne Lange                              Pernod Ricard follows the AFEP-MEDEF
                                                                                                                    02. Manousos Charkoftakis                   Code of Corporate Governance for listed                  attendance rate of 97%. The average length
01.                                                                           02.                                   Employee Director                           companies and applies the independence                   of the meetings was approximately 3 hours.
                                                                                                                    03. Wolfgang Colberg                        criteria established in the Code.                        Their main activities were to:
                                                                                                                    04. Kory Sorenson                           The 14 Directors – two of whom represent                 •	approve the half-year and annual finan-
                                                                                                                    05. Gilles Samyn                            Group employees and six of whom are inde-                   cial statements;
                                                                                                                    06. Veronica Vargas                         pendent, meet eight times per year on aver-              • review the budget;
                                                                                                                    07. Pierre Pringuet
                                                                                                                                                                age for meetings that are presided by the                •	oversee preparations for the Annual
                                                                                                                    Vice-Chairman                                                                                           Shareholders Meeting;
                                                                                                                                                                Chairman of the Board, who is also Pernod
                                                                                                                    of the Board of Directors                                                                            •	review and approve the work of the four
                                                                                                                                                                Ricard’s Chief Executive Officer. The Board
                                                                                                                    08. Nicole Bouton                                                                                       specialized committees;
                                                                                                                                                                is assisted in its work by four specialized
                                                                                                                    09. César Giron                                                                                      •	review presentations of the activities of
                                                                                                                                                                committees (see below) and the Chairman
                                                                                                                    10. Sylvain Carré                                                                                       the functional departments and affiliates;
                                                                                                                    Employee Director                           reports on its progress at the Annual
                                                                                                                                                                Shareholders’ Meeting. The Chairman is                   •	review its own functioning and that of its
                                                                                                                    11. Martina Gonzalez-Gallarza                                                                           committees.
                                                                                                                    12. Paul-Charles Ricard                     tasked with ensuring that the Group’s bodies
                                                                                                                    Permanent Representative                    run smoothly, which includes providing the
03.                 04.                            05.                        06.                                   of Société Paul Ricard                      directors with the resources they need to
                                                                                                                    13. Ian Gallienne                           fulfil their duties. In order to further root its
                                                                                                                    14. Alexandre Ricard                        work in the Group’s daily business opera-
                                                                                                                    Chairman & Chief Executive Officer          tions, the Board has access to the in-house
                                                                                                                                                                social network and holds one meeting per
                                                                                                                     Independent Director                      year in an operating affiliate.




07.                 08.                            09.                        10.




                                                                                                                                   50 %                         43 %                                    42 %                                  97 %
                                                                                                                           INDEPENDENT BOARD MEMBERS     NON-FRENCH BOARD MEMBERS                 FEMALE BOARD MEMBERS                      ATTENDANCE RATE




11.                 12.                            13.                        14.
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                                                     COMMITTEES OF                                                                                                                                             EXECUTIVE BOARD
                                                THE BOARD OF DIRECTORS
                            Four specialized committees – the Strategic Committee (created in 2015),
                             the Audit Committee, the Nominations, Governance & CSR Committee,
                              and the Compensation Committee – review specific topics in the area
                              assigned to them by the Board of Directors and submit their opinions
                                                    and recommendations.




 CREATED BY ALEXANDRE RICARD ON             THE AUDIT COMMITTEE                      THE NOMINATIONS, GOVERNANCE                 THE COMPENSATION
 11 FEBRUARY 2015, THE STRATEGIC                IS CURRENTLY                             AND CSR COMMITTEE IS                  COMMITTEE IS CURRENTLY
COMMITTEE IS CURRENTLY COMPOSED               COMPOSED OF THE                         CURRENTLY COMPOSED OF THE                   COMPOSED OF THE
   OF THE FOLLOWING MEMBERS:                FOLLOWING MEMBERS:                            FOLLOWING MEMBERS:                    FOLLOWING MEMBERS:
        Mr Alexandre Ricard                  Mr Wolfgang Colberg(1)                             Ms Nicole Bouton(1)                Ms Nicole Bouton(1)                                                                  Alexandre Ricard
             (Chairman)                           (Chairman)                                       (Chairwoman)                      (Chairwoman)                                                                Chairman & Chief Executive Officer
       Mr Wolfgang Colberg(1)                  Mr Gilles Samyn(1)                              Mr Wolfgang Colberg(1)              Mr Ian Gallienne(1)                                                                  Executive Director
         Mr Ian Gallienne(1)                  Ms Kory Sorenson(1)                                 Mr César Giron                   Mr Pierre Pringuet
          Mr César Giron                                                                                                           Ms Kory Sorenson(1)
         Ms Anne Lange(1)                                                                                                      Mr Manousos Charkoftakis(2)
        Mr Pierre Pringuet

                                                                                                                                                                                   Gilles Bogaert                                                                             Conor McQuaid
  The main activities of the Strategic    In accordance with its Internal                   The main activities of the            The primary responsibility                     Managing Director,                                                                           Global Business
                                                                                                                                                                                Finance & Operations           The Executive Board is the permanent body                    Development Director
      Committee over the course              Regulations and in liaison                 Nominations, Governance & CSR        of the Compensation Committee is
                                                                                                                                                                                                         responsible for coordinating and leading the Group,
       of the 2016/2017 financial        with the Statutory Auditors and                Committee during the 2016/2017           to define the compensation
                                                                                                                                                                                                            in cooperation with the Chairman & CEO, whom
              year were to:                the Consolidation, Finance &                         fiscal year were to:           policy for the Group’s Executive
                                                                                                                                                                                                         it assists with his responsibilities. It is comprised of
         review the key strategic           Internal Audit Departments                          select new Directors;              Directors in accordance
                                                                                                                                                                                                              the Chairman & CEO, the Managing Director,
     challenges for Pernod Ricard            of the Company, the Audit                        review the composition            with the recommendations in
                                                                                                                                                                                                       Finance & Operations, the General Counsel, the Global
             and the Group;                 Committee chiefly performs                 of the Board and the independence           the AFEP-MEDEF Code
                                                                                                                                                                                                            Business Development Director and the Human
            review and provide                   the following tasks:                             of the Directors;               of Corporate Governance.
                                                                                                                                                                                                       Resources and Sustainability & Responsibility Director.
     recommendations regarding            review the draft half-year report               evaluate the Board’s operations;        The main activities of the
                                                                                                                                                                                                           The Executive Board reviews all decisions related
      all significant acquisitions,      and annual financial statements                       review Sustainability &            Compensation Committee
                                                                                                                                                                                                              to Group affairs and submits various matters
    divestments and partnerships;          (corporate and consolidated);                   Responsibility issues and the        during the 2016/2017 financial
                                                                                                                                                                                                         to the Board of Directors when approval is required.
       address all strategic issues           monitor the Group’s cash                        Group’s performance;                       year were to:
                                                                                                                                                                                                       It also organizes the work of the Executive Committee
        relevant to the Company                     flow and debt;                                 review the talent                   review and propose
                                                                                                                                                                                                        and defines objectives for its members, in particular
   and Group (digital acceleration,         review significant risks faced                     management policy.               compensation and retirement
                                                                                                                                                                                                              by signing off on the three-year plan, budget
     operational excellence, etc.).           by the Group and assess                                                             benefits for the Executive
                                                                                                                                                                                                                     and regular business reviews.
                                          the Group’s risk management;                                                         Director and the total amount of
                                          assess internal control systems                                                               Directors’ fees;
                                             and review Internal Audit                                                                propose the general
                                                     action plans.                                                               policy governing long-term
                                                                                                                                        compensation;
                                                                                                                                    propose and implement
                                                                                                                              the annual plan for the allocation
                                                                                                                             of stock options and performance
                                                                                                                                            shares.                               Ian FitzSimons                                                                                 Cédric Ramat
                                                                                                                                                                                  General Counsel                                                                          Human Resources and
                                                                                                                                                                                                                                                                    Sustainability & Responsibility Director




      TWO MEETINGS IN 2016/2017             FOUR MEETINGS IN 2016/2017                       THREE MEETINGS IN 2016/2017         FOUR MEETINGS IN 2016/2017


      50%                100%              100%                100%                           67%               100%             75%               100 %

    INDEPENDENT          ATTENDANCE       INDEPENDENT          ATTENDANCE                  INDEPENDENT          ATTENDANCE     INDEPENDENT         ATTENDANCE
      MEMBERS                               MEMBERS                                          MEMBERS                             MEMBERS


                                                             (1) Independent Director. (2) Employee Director.
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                                              EXECUTIVE COMMITTEE
                                  The Executive Committee, the Group’s managing body
                                is comprised of the members of the Executive Board and
                                     the Managing Directors of the direct affiliates.




              01.                                   02.                                03.                                                         08.                                   09.                             10.                                11.




04.                             05.                                   06.                                  07.                                     12.                                   13.                            14.                                 15.



                                                                                                                                                   COMMITTEE MEMBERS
                                                                                                                                                   AS OF 1 JULY 2017
                                                                                                                                                   01. Alexandre Ricard                        06. Philippe Savinel                               12. Philippe Guettat
              ORGANIZATION AND                                                                                                                     Chairman & Chief Executive Officer,         Chairman & CEO                                     Chairman & CEO of Pernod Ricard Asia
                                                                                                                                                   Executive Director                          of Ricard SA and Pernod SA
              METHOD OF OPERATION                                                                                                                                                                                                                 13. Bruno Rain
              The Executive Committee has 15 members – the five        More specifically, the Committee:                                           02. Mohit Lal                               07. Paul Duffy                                     Chairman & CEO
                                                                                                                                                   Chairman & CEO, Pernod Ricard               Chairman & CEO                                     of Pernod Ricard Winemakers
              members of the Executive Board (see page 33 for             analyses the performance of the Group’s busi-
                                                                                                                                                   Global Travel Retail                        of Pernod Ricard North America
              more information) as well as the Managing Directors      ness in relation to its market plan (budget and
                                                                                                                                                                                                                                                  14. Christian Porta
              of the Group affiliates. They meet once per month        three-year plan);
                                                                                                                                                   03. Gilles Bogaert                          08. Ian FitzSimons                                 Chairman & CEO of Pernod Ricard Europe,
              (11 times annually), either at headquarters or at an        actively participates in setting financial and
                                                                                                                                                   Managing Director,                          General Counsel                                    Middle East, Africa and Latin America
              affiliate site. Under the direction of the Chairman &    operational objectives (financial results, debt and                         Finance & Operations
              CEO, the Committee helps to define the Group’s           qualitative objectives);                                                                                                09. Conor McQuaid                                  15. Jean-Christophe Coutures
              strategy and plays an essential coordinating role           periodically reviews the brand and market strate-                        04. César Giron                             Global Business Development Director               Chairman & CEO of Irish Distillers Group
              between headquarters and the affiliates, and among       gies, analyses performance and evaluates changes                            Chairman & CEO
              the affiliates themselves (Brand Companies and           in the organisation as needed;                                              of Martell Mumm Perrier-Jouët               10. Cédric Ramat
              Market Companies). The Committee is responsible             approves and ensures compliance with the                                                                             Human Resources and
              for overseeing the Group’s business activities and       Group’s main policies.                                                      05. Anna Malmhake                           Sustainability & Responsibility Director
              ensuring that its main policies are applied.                                                                                         Chairwoman & CEO
                                                                                                                                                   of The Absolut Company                      11. Laurent Lacassagne
                                                                                                                                                                                               Chairman & CEO of Chivas Brothers
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                                      HEADQUARTERS DIRECTORS                                                                                                                     HEADQUARTERS IN FIGURES
                       Pernod Ricard Headquarters is composed of the Group’s nine functional
                 departments and the Breakthrough Innovation Group (BIG) – the entity dedicated to
                 finding disruptive innovations. These departments spearhead the Group’s strategy
                      in their respective areas of expertise and coordinate implementation with
                    the affiliates. They are tasked with uniting the organisation behind the Group’s
                                                                                                                                                                                   SMALL IN SCALE, WITH STAFF FROM
                      priorities: ramping up sales growth, maximising operational efficiency and                                                                                   A WIDE RANGE OF BACKGROUNDS
                                    instilling the Pernod Ricard mindset at every level.




       CORPORATE AFFAIRS
            Jean Rodesch
        Vice President Global
         Government Affairs
                                            FINANCE
                                      Marie Boedec-Ménard
                                      Group Financial Control
                                              Director
                                                                                     GLOBAL BUSINESS
                                                                                      DEVELOPMENT
                                                                                 Pierre-Yves Calloc’h
                                                                             Digital Acceleration Director
                                                                                                                 HUMAN RESOURCES
                                                                                                                    Véronique Jacquet
                                                                                                               Human Resources Director,
                                                                                                                             HQ
                                                                                                                                                                                             320  EMPLOYEES WORK
                                                                                                                                                                                                  AT HEADQUARTERS

      José-Ramon Fernandez               Hélène de Tissot                             Niall Gately                   Alban Marignier




                                                                                                                                                                                              22
      European Affairs Director       Group Strategy & M&A                  International Projects Director       Director, Organizations,
          Armand Hennon                       Director                            Florence Rainsard                People & Leadership
     Vice President, Responsible         Olivier Guélaud                           Consumer Insights                  Géraldine Noel
          Marketing & S&R           Audit & Treasury Director                   & Experience Director            Compensation, Benefits,
           Laurent Scheer                 Gwenael Morin                              Olivier Rouche           International Mobility Director
        Public Affairs Director         Group Tax Director                           Global Revenue
                                                                                                                                                                                            NATIONALITIES ARE REPRESENTED
                France                     Julia Massies                            & Retail Director                                                                                             AT HEADQUARTERS
                                                                                                                      Carole Misset
                                    Financial Communication                     Yves Schladenhaufen
                                                                                                                Director of Pernod Ricard
                                   & Investor Relations Director                 Innovation & Portfolio
        COMMUNICATION                                                                                                   University
                                                                                                                                                              51.8%                                                                               48.2%
                                                                                    Strategy Director
            Olivier Cavil                                                            Tareef Shawa
                                                                                                                      Lani Montoya                                                      A BALANCED DISTRIBUTION
       Group Communications
                                          Isabelle Colin
                                                                                Luxury & CRM Director
                                                                                                                  Director Global Talent                                                   OF MEN AND WOMEN
                                    Financial Services Director                                                       Management
               Director
                                           Headquarters
          Christine Laborde
                                        Raffaele Cusenza                                 LEGAL
      Internal Communications
                                   Group Operations Controlling
               Director                                                           Philippe Prouvost
                                             Director
         Under recruitment                                                    Corporate Affairs Director,
      External Communications
                                           Laure Pavec
                                                                                Secretary of the Board                     BIG                                                                    BREAKDOWN
                                    Business Analyst Director
               Director
                                          Nicolas Piketty
                                                                                   Isabelle Gilles                   Alain Dufossé                                                                  BY AGE
                                                                              Group Intellectual Property          Managing Director,
                                      Internal Audit Director
                                                                                       Director                            BIG
                                          Valérie Popard
         SUSTAINABILITY                                                             Mathieu Prot                    Vlastimil Spelda
                                   Group Consolidation Director                                                                                                                                                 3
        & RESPONSIBILITY                                                       Director, Brand Security             Director Ideation
          Vanessa Wright                                                        & Anti-Counterfeiting                 Daphnée Hor
        Group Vice President                GROUP                                                             Director Strategy & Foresight
           Sustainability                INFORMATION                                                                       BIG
          & Responsibility                 SYSTEMS                                     OPERATIONS                  Stéphane Longuet
                                                                                   Peter Morehead                  Managing Director,
                                        Mathieu Lambotte
                                                                              Group Operations Director           Convivialité Ventures
                                     Group Chief Information                                                                                                                            2
                                                                                    Mark Harrison                    Franck Pierre
                                              Officer
                                                                             Global Supply Chain Director     Director, Innovation Delivery
                                     Jean-François Bernard                                                                                                                                                              4
                                                                                    Hervé Jouanno
                                        Vice President IT –
                                                                             Global Procurement Director,
                                         Group Operations
                                                                                 Direct Procurement
                                           Maël Tanou
                                                                                   Nicolas Meauzé                                                                                                       1       5
                                   Vice President IT Solutions –
                                                                             Group Indirect Procurement
                                        Corporate, MMPJ,
                                                                                       Director
                                     HCI at Pernod Ricard HQ
                                                                                Jean-François Roucou
                                          Claran Young
                                                                                    Group Director
                                        Vice President IT –
                                                                             of Sustainable Performance
                                        Group Governance
                                                                                                                                                              1              2                              3                      4                     5
                                                                                                                                                           Under 26:   From 26 to 35:               From 36 to 45:           From 46 to 55:        From 56 to 65:
                                                                                                                                                         9 employees   124 employees                98 employees            65 employees           24 employees




                                                             As of 1 October 2017.
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