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Pernod ‘on track’ for Absolut Vodka comeback
Pernod Ricard’s CEO believes the group is “in line with ambitions” to stabilise Absolut Vodka in the US following hefty declines for the brand last year.
Alexandre Ricard has blamed the cannibalising effect of flavours and price increases for Absolut’s decline in the US
Speaking to journalists at a roundtable event last week, Alexandre Ricard, CEO of French drinks group Pernod Ricard, admitted that the vodka was negatively affected by flavoured brand extensions that “diluted” its core variant in the US.
In the first half of its 2015/16 financial year the group saw Absolut’s organic sales decline 3% and volumes drop 2%. In the full 2014/15 fiscal year, the brand’s volume fell 5%, leading Pernod Ricard to write down the value of Absolut by €404m.
Alexandre Ricard said: “We are up 3% versus one year ago and I think this is sustainable,” he said. “Our medium-term objective is to reach mid-single-digit growth of 4-6%.
“Jameson has one quarter of its business in the US, The Glenlivet is the leading single malt in the US, we are still growing our innovations, and our medium-term objective is to stabilise Absolut – we are in line with these ambitions.
Of Absolut’s decline in the US, Ricard blamed an influx in flavour innovation for the brand and price increases, which it has now adjusted.
“In the US you have different cycles depending on brands. When we increased our price we vacated a very important price point in the US. This is a very important price point to the consumer and when we vacated it we realised we lost volume.
“Flavours can have a diluting affect on the mother brand so we wanted to focus on core flavours and drop anecdotal flavours.”
Ricard also said his group had “underinvested” in Absolut over the years, but that a new marketing campaign would be launched in the market later in 2016. “So perfectly in line with our road map revealed last year,” he said.
Since its value write-down, Absolut has released a number of activations that target millennial consumers, including the Taste Perfection brand platform and Electrik House bottles.
Last year, Diageo also revealed that it’s Smirnoff vodka brand had been hit by the group’s decision to release a plethora of flavours that were “almost all the same”.