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Pernod culls Absolut flavours to push growth

Pernod Ricard believes flavour culls across its Absolut vodka line and increased marketing spend will “stabilise” the brand following continued declines.

Absolut Vodka will "continue to see growth in flavours"
Pernod Ricard has reduced its line of Absolut vodka flavours

In its F16 financial results, the French drinks group saw sales of its key vodka brand decline 4% despite “improvement in underlying trends” in the brand’s key US market. This followed a €404 million write down on the value of the brand in F15 due struggles in the US.

Subsequently, Pernod launched a strategy to “stabilise” the brand in the medium-term, focusing on the development of its super-premium brand extension Absolut Elyx.

Speaking at a roundtable discussion covering Pernod’s F16 financial results, Gilles Bogaert, the group’s managing director, finance and operations, said the task to stabilise Absolut “isn’t easy” but the firm is “on track” to deliver its objectives.

“With Absolut, we have implemented initiatives to stabilise the brand in the mid-term,” he said. “But this isn’t easy, because it remains the biggest premium vodka brand in the world.

“We have reviewed price and we have a new campaign with the objective to speak more about the product quality of the brand – something we didn’t speak enough about in the past, which our competitors made sure they did.

“We have increased media spend behind the brand, we have reduced flavours because there were too many flavours, making more space for more disruptive innovations. So I think we have a competitive plan.

“We are on-track to deliver our mid-term objective in the growing vodka category, so I think we are doing the right thing with the brand.”

Also speaking about the US market, where the group has experienced a solid performance over the last 12 months, Bogaert said Jameson Irish whiskey is now Pernod Ricard’s largest spirit brand in the country.

Referencing the large number of Irish whiskey distilleries being built in Ireland at the moment, Bogaert added that Jameson is not afraid of competition since it competes with “the largest brown spirits brands in the world”.

He added: “Over the last 10 years, brands have been competing with Jameson, but Jameson hasn’t been affected. So we do not think having new distilleries are a problem because they are helping to create a dynamic category. We don’t mind having some competition because we have had this over the last 10 years.”

On Paddy Irish Whiskey, which Pernod Ricard’s Irish Distillers arm sold to US group Sazerac for an undisclosed sum earlier this year, Bogaert said: “We didn’t have a focus on Paddy so there was no reason why we should keep it when other companies are willing to put in the time.

“It shows we are not afraid to have competitors in the category.”

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