Bouncing back to happiness
INTERIM RESULTS announced by both Diageo and Pernod Ricard point to a strong recovery in brand fortunes for both parties. In the three months ending September 30 Diageo’s net sales were at £2.063 billion, 5% up on an organic basis from the £1.946bn posted in the same period last year. The results were, however, greeted with caution by chief executive Paul Walsh.
“Our first quarter performance is in line with our expectations with good volume growth and most improvement in the level of price/mix. The continued strong performance of all three hubs in International, together with further improvement in our performance in Asia Pacific, remain the key drivers of organic net sales growth in the quarter.”
He went on to point out that Diageo North America has posted “stronger growth”, but that over in Europe in both Greece and Spain the climate remained challenging and that net sales were down “markedly” in comparison with the first quarter of last year. However, Northern Europe again delivered good net sales growth and the multinational’s business in Russia continue to grow “strongly”.
“The year has started as we thought it would with a fragile economic and consumer environment in the developed markets and stronger consumer demand in the developing markets,” said Walsh. He also reiterated that Diageo will continue to increase marketing spend behind its brands globally.
Over in the Pernod Ricard camp, Champagne corks were popping. Net sales for the first quarter also ending September 30 were 14% up at €1.879bn against €1.646bn in the corresponding 2008 period and this the French force puts down to an organic growth of 10% driven by its 14 strategic brands which were up by 17%, a 7% foreign exchange effect and a 2% negative group structure effect, primarily relating to the disposal of Nordic and Spanish assets.
Most encouraging of all, its 14 strategic brands recorded a 10% volume increase as well as an organic sales growth of 17% – which highlights a “very favourable” mix/price effect. Nine of the Top 14 posted double-digit organic sales growth: Martell up 45%, Royal Salute up 37%, Jameson up 27%, Ballantine’s up 16%, Chivas Regal up 14%, the Glenlivet up 14%, Havana Club up 11% and the Champagnes Perrier Jouët along with Mumm up 36% and 13% respectively.
“The very good performance of the first quarter, which was driven by the top 14 and supported by our marketing investment, confirms our confidence in the current financial year,” said Pernod Ricard’s chief executive officer Pierre Pringuet.
Looking at the regions it was Asia/Rest of the World – which posted a very “buoyant quarter” with sales of €715m and an organic growth of 25%. Growth rates in China, India,Vietnam, Japan, Taiwan, Indonesia, the Persian Gulf and duty free were in excess of 30%. South Korea even confirmed its recovery and reported double-digit growth. There was an “encouraging” start to the year in the Americas with sales amounting to €482m and organic growth was 3%. In the US sales were stable but the top 14 grew by 2%. Europe posted sales of €517m and organic growth of 2%.
