Improved Asia performance boosts Pernod sales

Pernod Ricard has begun to witness a “gradual improvement” in its sales, boosted by a stronger performance in China and the Americas.

Pernod Ricard has reported a marginal improvement in its third quarter financial results

Reporting its third quarter 2014/15 results, the French drinks group said its organic sales had risen 2% to €6.542 billion in the first nine months of its financial year. Reported growth sat at 6% due to a “very favourable” foreign exchange impact.

The group, producer of The Glenlivet Scotch and Martell Cognac, has seen its sales struggle in Asia-Pacific over the past two years as China continues with its anti-extravagance campaign, forcing it to embark on a global cost-cutting mission dubbed Project Allegro.

However, the company has finally started to witness marginal growth in the region, with sales growing 4% following a “stable” Chinese New Year.

In the Americas, Pernod Ricard reported 5% organic growth for Q3, pushing year-to-date sales to 3%. However, performance in Europe remained flat with 0% growth.

Other emerging markets proved successful for the firm, with year-to-date sales in India growing 19% and 12% in Africa and the Middle East, driven by the growing popularity of Jameson in South Africa.

In terms of brands, net sales of The Glenlivet – which recently hit case sales of one million – increased 14%, making the Scotch the only brand in Pernod’s stable to witness double-digit value growth.

Jameson Irish whiskey and Ballantine’s blended Scotch whisky grew 9% and 4% by value respectively, while Malibu rum continued its trend of decline with sales dropping 6%.

After announcing the group’s H1 results in February, Alexandre Ricard, newly appointed chairman and CEO of Pernod Ricard, blamed the launch of “too many” flavour innovations for the sales decline of Malibu.

Net sales of Absolut, Chivas Regal and Havana Club all remained largely flat, while Martell grew 1% and 7% by volume.

Overall, the group’s Cognac portfolio is recovering at a faster rate that its whisky stable, which has declined 8% in the first nine months of 2014/15 and 6% in the quarter.

“Our sales growth to date at +2% is solid and confirms the gradual improvement we had announced in October, in an environment that remains challenging,” said CEO Ricard.

Ricard’s move into the role of CEO in February saw the return of the drinks company to the direction of a member of the founding family, almost three years after former CEO Patrick Ricard, Alexandre’s uncle, died suddenly in 2012.