lohud.com

Sponsored by:

Business in the Burbs

Movers, shakers and newsmakers

Pernod Ricard trying to oust supplier

March
9

Pernod Ricard USA LLC, the Purchase-based company that sells alcoholic beverages, is in a high-stakes court fight with a drink supplier over Pernod Ricard’s decision to drop the supplier and hire a new one.

The company has filed a lawsuit in U.S. District Court in White Plains against Stamford, Conn.-based United States Beverage LLC, arguing that their contract expires March 31. Pernod Ricard says in court papers it has notified United States Beverage that it wants to replace it with the High Falls Brewing Co. LLC of Rochester.

The contract has been in effect since April 2002. It gives United States Beverage the exclusive right to buy Pernod’s Seagram’s Cooler low-alcohol, flavored drinks and sell them to wholesalers in the United States and in Caribbean nations.

A drawn-out court fight would hurt Pernod. The company, which makes the drinks at a plant in Indiana, says an “overwhelming� portion of the drink sales takes place from May to August and that by insisting that it will still be the supplier during those months United States Beverage has caused “great confusion� in the marketplace, making it hard for High Falls to take over the job smoothly and harming the brand.

Wholesalers and retailers may stop buying the Seagram’s Cooler drinks and start focusing on competitors’ drinks, Pernod says. And the summer 2007 selling season is an important one for the brand, given its declining sales last year, Pernod says.

“A loss of confidence in the brand at this critical time may be a blow from which the brand will not soon recover,� Pernod argues.

But United States Beverage LLC says in court papers that it has paid Pernod more than $30 million in fees and spent “additional tens of millions of dollars� to promote the brand. United States Beverage says it spent nearly $10 million on promotions than its contract with Pernod required and that it did this based on Pernod’s assurances that the companies would have a longterm relationship.

United States Beverage is relying on a state law that it says protects it against losing the contract unless Pernod has good reasons for breaking off the relationship.

Pernod’s decision to drop United States Beverage is tied to its attempts to sell the Seagram’s Cooler business. The company says in court papers that United States Beverage submitted an offer last year but the offer was rejected.

Pernod later decided to sell the business to High Falls but that deal fell through, Pernod says. Those talks eventually turned to the possibility that High Falls would replace United States Beverage as the exclusive supplier and the companies struck a deal in December.

Pernod has asked the court for an injunction prohibiting United States Beverage from telling its distributors and retailers it will be the supplier after the contract expires.

Jack Shea, a spokesman for Pernod, said the company had no comment on the lawsuit. Ronn Torossian, a spokesman for United States Beverage, also did not comment. Lawyers for the two sides could not be reached.

This entry was posted on Friday, March 9th, 2007 at 7:35 pm by Allan Drury.
You can follow any responses to this entry through the RSS 2.0 feed.
Print Print | Email Email

Advertisement

Leave a Reply

Advertisement
About this blog
Business in the Burbs is our online news blog about businesses based or operating in the Lower Hudson Valley. Visitors here will also find items of interest to consumers in the region. Most contributions are from business reporters and editors covering Westchester, Rockland and Putnam counties.

Subscribe

Get blog updates via email:




About the Authors

Categories

Other recent entries




Links

Recently Updated LoHud Blogs
Monthly Archives



Bad Behavior has blocked 1589 access attempts in the last 7 days.