Belvédère ‘back in industry race’ despite sales fall
French spirits group Belvédère saw its sales drop 4.1% in 2014, however the group’s CEO claims increased market share shows it is “back in the industry race”.
The group, owner of Marie Brizard liqueurs, reported sales of €467 million in the financial year as it embarks on an “ambitious” new strategic plan.
It was revealed in December 2014 that the Sobieski Vodka maker was planning to offload some of its “loss making” operational assets” in a bid to boost profits following months of decline, marking a “new chapter” in the group’s history.
A number of wholesale and retail activities were dropped in Poland, where sales declined 10% to September last year, and real estate assets in France, where sales fell 6%.
The abandonment of the gorup’s third party vodka contracts, wine distribution contracts, and the sale of its Danzka Vodka brand to the Behn Group accounted for €52.7 million (72%) of the €72.7 million decline in sales between 2013 and 2014.
However, 2014 was described as a “year of normalisation” for Belvédère as the group began to implement its new strategic plan under the new management team built around its CEO Jean-Noël Reynaud, with market share increasing for its flagship brands in a number of “key markets”.
In its French domestic market, the company’s William Peel branded Scotch whisky brand saw a 21.9% increase in market share, while its brands in the wine-based drinks segment rose 28.5% and Sobieski Vodka increased 11.9%.
However net sales in France dropped 3% to a total of €193.3 million, said to be a result of “abandoning of non-profitable sales contracts”.
Polish tax hikes
In Poland, Belvédère’s sales dropped 19.7% to €179.0 million in 2014 as excise tax increases continued to bite and the group ended its third party vodka contracts.
Blaming unfavourable comparisons to 2013, when sales were “particularly high” as consumers stocked up before the tax increases in 2014, the group also said it had “chosen not to take part in the price war undertaken by its peers in order to protect its margins”.
In US control states Belvédère’s vodka sales grew 9.4%, with Sobieski Vodka growing 9.4% in market share. However, in total, sales dropped 5% to €19.9 million due to “inventory clearance by distributors”.
Sales also declined 3% in Spain to reach €13.9 million, impacted by the end of the Pulco subcontracting contract at Marie Brizard. Meanwhile sales fell 4.4% in Brazil to €5.1 million.
Belvédère also revealed that it is engaged in a legal battle with two of its former board members who are seeking the payment of bonuses of US$7.6 million and US$2 million respectively resulting from the divestment of Florida Distiller in 2011.
“Our brands’ performances prove that we are now back in the wine and spirits industry race,” said CEO Reynaud. “Not only is our level of activity perfectly in line with our ambitions and action plan, but it also gives us confidence in our ability to meet our targets.”
“We have begun to work on rationalising and optimising our activities. We are henceforth an agile multiregional group adapted to market constraints and owning high-performance brands, which will enable us to ensure our scale-up and the acceleration of our profitable growth.”
In its previous financial results, Belvédère revealed a 9.5% sales decline in the year to September 2014 due to a “global fall in the wine and spirits market”.