Pernod FY sales rise despite Scotch setback

Pernod Ricard, the world’s second-largest spirits producer, has reported “solid and encouraging” single-digit sales growth in 2015/16 despite continued “difficulties” in China and within its Scotch portfolio.

Jameson Irish whiskey witnessed impressive growth in 2015/16

In the French group’s full financial year, sales grew 2% on an organic basis to €8.68 billion (US$9.67bn) and profit from recurring operations also increased 2% to €2.27bn (US$2.53bn).

However, Q4 sales declined 1% organically and 7% on a reported basis (taking into account the impact of exchange rates and acquisitions) due to shipment phasing in the US and a flat performance in France.

Pernod, maker of The Glenlivet Scotch and Absolut vodka, said its overall improvement for the year was driven by the US, where sales grew 4%.

The group has reported a “very good” performance in India, Africa Middle East, Japan and Australia and “improvements” in Europe, but sales were hit by a “tough pricing environment” in its domestic French market.

Despite celebrating a brighter performance in China in 2014/15, Pernod suffered a 9% sales decline in the country in its latest fiscal year due to a double-digit loss among the firm’s Scotch brands.

The group also saw declines in Korea, driven by continued subdued performance of its Imperial Scotch brand and a consumer shift towards lower abv spirits, and Asia travel retail.

Pernod has created a dedicated salesforce for premium brands in China, implemented a new leadership and commercial team in Korea, and created a Global Travel Retail division to drive growth in the channels.

Scotch declines

In terms of categories, Pernod’s global Scotch whisky sales remained flat, with Chivas Regal falling 4% due to challenges in China and currency fluctuations impacting Brazil and Americas travel retail. However, The Glenlivet single malt and Ballantine’s blended Scotch saw strong performances.

Absolut vodka, which was hit by a €404m value write-down in 2014/15, declined 4%, but Pernod noted “improvement in underlying trends” in the brand’s key US market. Last year, the group said it would focus on pushing its super-premium Absolut Elyx brand extension to regain growth in the market.

Jameson, the world’s leading Irish whiskey brand, increased sales by an impressive 16%, with the brand now accounting for one quarter of Pernod’s total US sales. In particular, the launch of the Jameson Caskmates series bolstered results.

Martell Cognac’s sales dropped 4% due to destocking in South East Asia and “negative mix” in China. Beefeater gin and Havana Club rum both experienced single-digit growth.

“FY16 was a solid and encouraging year, delivering profit from recurring operations in line with guidance while maintaining investment and implementing significant initiatives to deliver our medium-term strategy and objectives,” said Alexandre Ricard, chairman and CEO of Pernod Ricard.

“For full year FY17, in a contrasted environment, we expect to continue improving our business performance year-on-year versus FY16, supporting priority markets, brands and innovations and focusing on operational excellence.

“As a consequence, our guidance for FY17 is organic growth in profit from recurring operations between +2% and +4%.”

Earlier this year, Pernod’s Irish Distillers unit finalised the sale of its Paddy Irish Whiskey brand to US group Sazerac for an undisclosed sum. At the start of 2016, the group purchased a majority stake in German gin brand Monkey 47.