Troublesome quarter for Pernod Ricard

Troublesome quarter for Pernod Ricard

French beverage producer Pernod Ricard, number two in the world for wine and liquor, is taking a possible slower revenue growth in the current fiscal year into account after it has had an arduous first quarter. In the emerging market, with China in particular, Pernord Ricard seems to have lost its stride a bit.

9 % drop in revenue

In the first trimester of its broken fiscal year, from July through September, the French giant managed a revenue of 2.013 billion euro, dropping 9 % in absolute figuers. Exchange rates had a significant effect, as organically, the drop was limited to 1 %.

 

A year ago, the emerging markets managed to deliver a huge growth in this quarter, with China going up 18 % and Russia 28 %. It is precisely these regions that are now failing, organically dropping 6 %. Pernod Ricard alsofailed to reproduce its strong American sales from last year (+16 %) and instead remained level over there. Europe is performing better with an organic growth of 3 %.

 

When taking the entire year into consideration, Pernod Ricard is estimating an internal growth of some 4 to 5 %, lower than the 6 % in 2012-2013.

 

Big brands score less

Remarkable is that the 14 biggest brands, including Absolut Vodka, Chivas and Ricard, dropped 1 % in volume and 5 % in turnover. That was hard to swallow as these brands combined signify 64 % of the total group turnover. Top of the line brands like Martell (-12 % in turnover) and Ballantine’s (-11 %) suffered heavily, particularly in Asia.

 

Premium wines managed to hold onto their volume and increased their turnover 1 % thanks to a slight increase in price. Pernod Ricard also has several local brands in its portfolio, with Pastis 51 as a well-known name among France lovers. This sector, representing 17 % of the group turnover, grew 11 % (volume) and 8 % (turnover) in the last quarter.

 

Pernod Ricard is not the only beverage producer struggling this past quarter. British Diageo and French Rémy-Cointreau recently published similar numbers.

 

 

(Translated by Gary Peeters)

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