Briefing a group of journalists and analysts in London yesterday (Feb 14) he said profits were in line with the company’s end-of-year predictions. The forecast for the full financial year 2017 is profit from recurring operations (PRO) of between 2% and 4%.
He reported strong growth in the US along with Jameson Irish whiskey (+20%) and its innovation programme (+22%). He also pointed to growth coming from China, travel retail and Russia, with improvements for Pernod’s strategic brands: Absolut, Martell and Ballantine's.
Ricard commented that while the ‘demonetisation’ in India had had an adverse impact, he said the move to rid the economy of “black money and the black economy” was a good thing in the long term, but it was affecting India’s middle class.
Sales for the half year were: €5,061 million (+4% sales growth) and PRO was €1,500m, also +4% (figures adjusted for Chinese New Year which was later than last year).
Net profit was €914m, +3% and cash flow was up +34% to €658m.
By region, the Americas, which represents 28% of Pernod sales, was up 7% compared to the equivalent period in 2016. This was driven by an upturn in the market and company reorganisation in the US and travel retail. Asia and the Rest of the World (40% of sales) were up 3% thanks to China but a slow down in Indian whisky due to the demonetisation, held it back.
Europe was up 3%, driven by recoveries in east Europe (+11%) and specifically in Russia.
Ricard said Jameson is the star performer. Its sales grew by 20% with volumes up 16%. He also cited Martell (+7%) and Ballantine’s (+6%). Absolut was back in growth at 1%.
In answering questions, Ricard acknowledged that while Chivas was struggling in China, Ballantine’s Finest was “performing well”, as was Passport, specifically in Mexico, Brazil, and sub Sahara Africa.
On dealing directly with the consumer, Ricard talked up the significance of QR codes in telling the consumer exactly what the brand is about and what is in it. He made the point that much of the information on labels was difficult to read and much as to fulfill legal requirements.
Alain Dufossé, director general of Pernod’s Breakthrough Innovation Group (BIG), which is tasked with discovering “disruptive innovations” discussed the concept of ‘Hometainment’. He talked about its ‘OPN Project: the leading gateway to home conviviality built around a liquid library powered by digital’. He quipped: “This is not just a moonshot. We aim to land on the moon.”
He acknowledged that the technology was “not quite there yet. There is still a way to go.”
On the move to ‘Hometainment’, Ricard defended the initiative by saying that they had noticed the trend in Colombia where people had stayed at home because they feared going to bars and getting shot. Also, with the atrocities in Turkey recently, hotel occupancy was down between 60 and 80%. Also people were travelling less, going to ‘safe’ countries such as Spain and Greece. The French were just going to the south of France. He said: “People travel less. But that does not mean they drink less.”
Asked about Diageo’s re-entry to the Irish whiskey sector with Roe & Co, Ricard said: “It’s absolutely great. Where once there were only two distilleries in Ireland, there will soon be 35. Jameson has three quarters market share.”
When told that Diageo has identified an opportunity at the premium end of Irish whiskey, claiming that Jameson is a ‘standard’ whiskey, Ricard reeled off a list of premium Jameson expressions, such as Caskmates and Double Barrel, along with the single pot still brands, Redbreast, Green Spot and Midleton.