French spirits manufacturer Pernod Ricard has seen its profit drop 15 % over the past fiscal year although turnover did spike again, after it dropped 7 % last year. A decrease in vodka sales is the main factor in that drop.
Weak euro pushes turnover up
Pernod Ricard's total turnover grew 8 % to 8.56 billion euro, but a large part of that increase comes on the back of the weaker euro: without exchange rate fluctuations, turnover would only have increased 2 %. On the other hand, profit dropped 15 % to 861 million euro, while it stayed above 1 billion euro last year.
Its Absolut brand was the major cause of that profit drop, as Pernod Ricard was forced to write off 652 million euro on the vodka brand which is particularly struggling in the United States. In order to turn things around, the company is updating the brand image, with new flavours and packaging on top of additional marketing efforts.
Pernod Ricard acquired Absolut Vodka in 2008 from Swedish Vin & Spirit, back when vodka was one of the strongest growing liquor branches. Unfortunately for Pernod Ricard, that growth has halted over the past few years, particularly in the United States.