According to food industry consultant Technomic, Skinnygirl was the fastest growing brand of spirits in the U.S. in 2011, selling 586,000 9-liter cases. Americans bought 3.5% more spirits in 2011 than the year before. The Skinnygirl brand was created by reality star Bethenny Frankel and sold to Beam Inc. (NYSE:BEAM) in 2011. In terms of U.S. market share, Beam is second only to Diageo (NYSE:DEO) at 9.8%.

As a rum lover, I don't particularly care for either of Beam's brands (Cruzan, Ronrico) or Diageo's (Captain Morgan). Instead, I prefer the Cuban flavors of Havana Club, a 50/50 partnership between Pernod-Ricard (OTCBB:PDRDY.PK) and the Cuban government. I'm able to enjoy their rums, which are unavailable in the U.S. Pernod-Ricard, the world's leading seller of premium and prestige spirits is traded over-the-counter. For those interested in something other than the pink sheets, here are three additional ways to play its stock.

Investopedia Broker Guides: Enhance your trading with the tools from today's top online brokers.

Option # 1
In May 2011, Power Corporation (OTCBB:PWCDF.PK) looked like a stock with hidden value in its stock. As a holding company that owns majority control of several Canadian financial institutions through Power Financial (TSX:PWF.TO) as well as separate investments in Canada, Europe and Asia, it tends to trade at a discount because of its conglomerate-like structure. Pernod-Ricard comes into play through its 50% interest in another holding company, Parjointco NV, which is based in the Netherlands.

Parjointco owns 76% of Pargesa Holding's voting rights and 56.5% of its equity. Pargesa in turn owns 52% of Groupe Bruxelles Lambert, itself a holding company on the Brussels Stock Exchange. GBL, for short, owns 7.5% of Pernod-Ricard stock after recently selling 6.2 million shares for a capital gain of 240 million euros. At the end of this convoluted trail, Power Corporation shareholders end up with slightly less than 1% of Pernod-Ricard's shares without paying an annual management fee like you would with a mutual fund or ETF. In addition, you get a stock whose dividend yield is 4.4% as of May 4, and higher than it's been for most of the last decade. Income investors will definitely like the stability of its dividend payout.

SEE: The Advantages of Mutual Funds

Option #2
Even though it is the second largest liquor company in the world, there aren't too many options when it comes to exchange-traded funds. The first of two ETF options is the SPDR S&P International Consumer Staples Sector ETF (ARCA:IPS), which owned 2.49 million shares as of the end of March, representing a 1.7% weighting. Other alcohol-related companies in the fund's holdings include Anheuser-Busch InBev (NYSE:BUD), Carlsberg A/S, Foster's Group, Asahi Breweries, Kirin Holdings, Diageo, Heineken NV and SABMiller. While mostly focused on beer companies, Pernod-Ricard and Diageo are almost 7% of the fund's assets, giving investors a reasonable representation of the global liquor business, not to mention other great businesses like Nestle and Danone. I'd take this fund over the next suggestion because it's global in nature.

SEE: An Inside Look At ETF Construction

Option # 3
As recently 2004, a closed-end fund traded on the New York Stock Exchange that owned Pernod-Ricard stock. Unfortunately, the France Growth Fund Inc., managed by Credit Agricole Asset Management, was liquidated in June of that year. The next and best bet is to own the iShares MSCI France Index Fund (ARCA:EWQ), which replicates the holdings and performance of the index of the same name. At present, Pernod-Ricard's weighting represents 2.29% of the 73-stock portfolio. It's questionable how many investors would want to buy this country-specific fund over Germany, but for those who want to benefit from the continued success Pernod-Ricard is experiencing in the global liquor business, this is a third way to do so.

SEE: Open Your Eyes To Closed-End Funds

The Bottom Line
In recent years, Pernod-Ricard's focused its efforts on its Top 14 brands, which includes Havana Club. In the first six months of fiscal 2012 ending Dec. 31, 2011, its Top 14 brands generated 61% of its sales, growing 9% year-over-year in terms of volume and 14% in terms of value. It continues to grow profits at double-digit rates, allowing it to pay down some of the debt it incurred by buying Absolute Vodka in 2008. While Diageo is more popular with investment managers, that shouldn't stop you from considering its equally successful competitor. Both companies are at the top of their games these days.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

At the time of writing, Will Ashworth did not own shares in any of the companies mentioned in this article.

Related Articles
  1. Mutual Funds & ETFs

    7 Best ETF Trading Strategies for Beginners

    Exchange-traded funds are ideal instruments for beginning traders and investors. Learn the seven best strategies for trading ETFs.
  2. Markets

    Why Gluten Free Is Now Big Business

    Is it essential to preserving your health, or just another diet fad? Either way, gluten-free foods have become big business.
  3. Professionals

    Chinese Slowdown Affects Iron Ore Market

    The Chinese economy's ongoing slowdown is having a major impact on iron ore demand.
  4. Mutual Funds & ETFs

    ETF Analysis: SPDR Dow Jones International RelEst

    Learn how the SPDR Dow Jones International Real Estate exchange-traded fund (ETF) is managed and for whom the ETF is most appropriate.
  5. Mutual Funds & ETFs

    ETF Analysis: iShares JPMorgan USD Emerg Markets Bond

    Learn about the iShares JPMorgan USD Emerging Markets Bond fund, which invests in bonds of sovereign and quasi-sovereign entities from emerging markets.
  6. Active Trading Fundamentals

    How Hedge Funds Front-Run Index Funds to Profit

    Understand what front running is, and learn how hedge funds use this investing strategy to profit from the anticipated stock buys of index funds.
  7. Mutual Funds & ETFs

    ETN Analysis: Rogers Intl Commodity Energy Total Return

    Learn more about the Rogers International Commodity Total Return, which is an exchange-traded note that tracks a broad index of commodity futures.
  8. Mutual Funds & ETFs

    ETF Analysis: Schwab US Large-Cap

    Discover how the Schwab U.S. Large-Cap exchange-traded fund is managed, the index it tracks and the investors for which it is most appropriate.
  9. Personal Finance

    A Day in the Life of an Equity Research Analyst

    What does an equity research analyst do on an everyday basis?
  10. Mutual Funds & ETFs

    ETF Analysis: ProShares UltraPro Nasdaq Biotech

    Obtain information about an ETF offerings that provides leveraged exposure to the biotechnology industry, the ProShares UltraPro Nasdaq Biotech Fund.
RELATED TERMS
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Exchange-Traded Fund (ETF)

    A security that tracks an index, a commodity or a basket of assets ...
  3. Exchange-Traded Mutual Funds (ETMF)

    Investopedia explains the definition of exchange-traded mutual ...
  4. Hard-To-Sell Asset

    An asset that is extremely difficult to dispose of either due ...
  5. Sucker Yield

    When an investor has essentially risked all of his capital for ...
  6. Lion economies

    A nickname given to Africa's growing economies.
RELATED FAQS
  1. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  2. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  3. What does a high turnover ratio signify for an investment fund?

    If an investment fund has a high turnover ratio, it indicates it replaces most or all of its holdings over a one-year period. ... Read Full Answer >>
  4. Does index trading increase market vulnerability?

    The rise of index trading may increase the overall vulnerability of the stock market due to increased correlations between ... Read Full Answer >>
  5. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  6. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!