Travel retail hits Pernod half-year sales

Jameson owner Pernod Ricard saw profits drop 2.4% in the last six months of 2020 due to the impact of the coronavirus pandemic on travel retail.

Pernod Ricard’s half-year results for its 2020 fiscal year saw sales decrease 3.9% on an organic basis to €4.99 billion (US$6.05bn) and profits drop 2.4%.

According to its latest results, the Absolut Vodka maker saw sales improve during Q2 compared with Q1. However, declining travel retail sales affected the group’s performances in the Americas, Europe and Asia.

Pernod Ricard’s sales, excluding travel retail, grew by 1% during the six-month period.

In the Americas, sales for the six months to the end of December 2020 grew 2%, but a 5% growth in the US was offset by declines in travel retail.

In the Asia-rest of the world market, sales dropped 6% due to ‘Covid-related declines in certain Asian markets and travel retail’. Pernod also witnessed double-digit growth in China (+13%), Turkey, Korea and the Pacific.

In Europe, sales dropped 5% after ‘very strong growth’ in Germany, the UK, Russia and Poland was offset by the impact of the Covid-19 pandemic across Spain, France, Ireland and travel retail.

Alexandre Ricard, chairman and CEO of Pernod Ricard, said: “We are particularly encouraged by our must-win domestic markets returning to growth in H1 FY21. The first half confirms the long-term sustainability and underlying strength of our business.”

Across its brands, Pernod Ricard saw sales of its strategic international brands decline 6%, despite ‘solid growth’ of Malibu and The Glenlivet Scotch whisky. Overall, the category was impacted by adverse sales in global travel retail.

Strategic local brands were also in decline during the period and fell 4% due to Seagram’s Indian whiskies and Seagram’s Gin in Spain.

However, Pernod Ricard saw sales of its specialty brands climb 22% thanks to the ‘very dynamic development’ of brands including Lillet vermouth, Malfy gin, Aberlour Scotch whisky, and American whiskeys such as Jefferson’s, Rabbit Hole and Smooth Ambler.

Irish whiskey’s resilience

Pernod Ricard’s Irish Distillers unit, which produces Irish whiskey brands including Redbreast, Spot, and Method and Madness, reported that Jameson recorded sales growth of 3% globally in the last six months of 2020.

The Irish whiskey brand recorded volume growth in key markets including the UK (+12%), US (+7%), Russia (+7%), and Ireland (+4%).

The group’s single pot still Irish whiskey sales were driven by 33% value growth of the Redbreast brand, which added a 27-year-old bottling to its range in March 2020. Irish Distillers also reported a 31% value growth across the Spot range.

Conor McQuaid, chairman and CEO of Irish Distillers, said: “Despite an extremely difficult environment, we had a solid start to the financial year, with sales of Jameson Irish whiskey showing resilience by growing 3% in the first half of the year.

“The trend of premiumisation continues apace as more and more consumers choose higher-quality spirits, with Redbreast, the Spot range, and Method and Madness achieving their highest ever volume sales, with the Midleton range seeing significant value growth (+46%) driven by the US, UK, Irish, German, and Canadian markets.”

‘Uncertain and volatile environment’

Despite continued disruption in the global on-trade and travel retail sectors, Ricard predicted the company would return to growth in its full-year results for the year.

He added: “Despite an uncertain and volatile environment, with disruption in the on-trade and a prolonged downturn in travel retail, we anticipate organic sales growth for full-year FY21, thanks in particular to our dynamic performance in domestic must-win markets USA, China and India.

“We will continue to implement our strategy, in particular accelerating our digital transformation, while dynamically managing resources. Thanks to our solid fundamentals, our teams and our brand portfolio, I am confident that Pernod Ricard will emerge from this crisis stronger.”