The Absolut Company – The inside story from the industry’s oldest and most progressive ten-year-old
This year marks the 10-year anniversary of The Absolut Company – at least as a company name. We wanted to hear the insiders’ story, so we had a chat with Björn von Matérn, Eric Näf and Paula Eriksson, who have all been at the company for over 10 years. They have seen some major changes – and noticed a few things that never changed – over the years.
The Absolut Company’s history stretches back well before 2008, when Pernod Ricard acquired the company. Prior to the acquisition, TAC was a state-owned company in a monopoly position, with full control of the Swedish market. The company also had a different name, Vin & Sprit. During the ‘90s and the following decade, the company went through two defining changes. The first coincided with Sweden joining the European Union in 1995. Because of EU regulations, Vin & Sprit could no longer act as the only operator in the market and the spirits producing monopoly in Sweden came to an end.
Björn and Eric, you were both working with marketing when you joined Vin & Sprit in ’93-’94. What was it like trying to market and sell products when you had no competition?
Eric Näf: Well, it was a somewhat different mindset back then. As you say, it was still a state monopoly with no competition in Sweden. At the same time, everything was changing. When we joined the company, it was in full swing of adapting to the free market. It’s quite a challenge to turn a business with 100 percent market share into something entirely different. You really didn’t know what to expect. But we all had felt an air of anticipation and pioneering spirit around the place.
Björn von Matérn: Yes, and we, as marketers, were the knights in shining armor supposed to make sense of it all! Joking aside, we joined a company with lots of knowledge and experience in producing high quality products, but without the knowledge of marketing or selling the products – at least for the Swedish market. Because, why would they? In a monopoly, you don’t have to care about market shares or competition. This place had a different mindset back then. So, I think people were a bit skeptical about what we could provide.
In the next decade, Vin & Sprit and its flagship brand Absolut Vodka would reach new markets and see new record profits.
However, in 2006, the year before Paula Eriksson joined Vin & Sprit, it was going through its second major change in just over a decade. After the monopoly had come to an end, the government in Sweden decided it no longer had any reasons to own Vin & Sprit.
Paula, what was it like to join the company in the middle of the selling process?
Paula Eriksson: In some ways, I think it might have been an even bigger change than in 1995. We had been a state-owned company for over 90 years up until 2007. So of course, it was a strange feeling for everyone involved. We were familiar with acquiring other businesses – like small breweries and distilleries, the Grand Hôtel in Stockholm and a pharmaceutical company – but this was a totally new experience. This time, we were preparing to be sold instead. It was a strange feeling around the place.
BvM: I remember It was really hard to keep the momentum going during that time. The selling process lasted for two years and we were in some sort of limbo, with no real idea of what was next.
And during that time, I think we all felt a bit exposed. When you’re about to be sold, you have to make a due diligence where every area of the business gets scrutinized. Even our competitors could see everything you did, all the details. It really made us uncomfortable.
PE: Yes, it was difficult, but we really fought through!
EN: Yes, we really did! There were lots of speculations over who would place the winning bid, and I think we were all a bit afraid that we would become some sort of traded commodity, where you only see the numbers and pay no interest to our history or heritage.
After months of due diligence and years of an uncertain bidding process, the French family-owned company Pernod Ricard finally acquired Vin & Sprit in 2008, in competition with three other bidders.
So, I guess you were all pretty satisfied with the outcome?
PE: Definitely. I was part of the due diligence process and met with all of the bidding companies. When I met with the team from Pernod Ricard I was really impressed. They really seemed to care about us – our brands, our cultural heritage and what our long-term potential was. And they seemed like really good people too!
EN: We have always had a great atmosphere in this company, so it was encouraging to see Pernod Ricard really believing so strongly in nurturing good corporate culture. They really stressed the importance of conviviality and they wanted us all to get to know each other from the start. It felt like the first day at school, when someone suddenly grabs your hand and shows you around the place. I was quite impressed with that, given the fact they’re such a large company.
PE: I agree. One of Pernod Ricard’s motto is to “make a new friend everyday”, which became very clear at one point when we had guests visiting from the French office. I had everything planned and booked – a nice hotel with a view and an evening off before a day full of meetings. I thought it might be nice for him to perhaps take a walk and have a relaxing dinner on his own before a very hectic day. At least, that’s what I would have wanted. But when I told my new boss at Pernod Ricard about the plans for the evening, he told me “No, at Pernod Ricard we never eat alone”.
BvM: Still, they really understood us, and showed a great respect for our know-how. Some might have been afraid that new owners would eventually move the production of Absolut Vodka away from Sweden. But from Pernod Ricard’s perspective, that was out of the question. They knew the importance of origin and heritage.
PE: Yes, they now the importance of terroir– the concept that Swedish vodka is produced in Sweden, Scotch in Scotland and a bottle of Beefeater London Dry Gin can only be produced in London.
Looking back to when The Absolut Company became a part of Pernod Ricard, can you name something that has shifted in the mindset – as a company?
PE: I think we’re a more professional company than before. Becoming a part of a much bigger group and realizing that everyone around you also know this business inside out was an important lesson and a humbling experience for us as a company. And it has spurred us to do an even better job, always looking to progress.
Is there anything that will never change?
BvM: Yes, the approach that we’re in the entertainment industry. Not only in what we’re selling – yes, we’re selling spirits, a dream, a vision, an inspiration – but also in how we do things at the company. Just look at our office and how we do things around this place. We’re having fun at work. We have a fantastic restaurant, and our quarterly meetings are more a show than a meeting. And we’re doing everything out of joy.
EN: Yes, we’re definitely in the entertainment industry. And we’ve also always had a long-term approach and ambition. We don’t just go for the quick deal. We’re really here to stay, for generations. We had that approach long before Pernod Ricard came into the picture, but the fact that they also see it that way is just a huge bonus.