Pernod Ricard defends results

02 September, 2015

A senior Pernod Ricard management team were in London this week (Sept 2) to clarify, explain and defend its recent 2014/15 full year results.

Gilles Bogaert, managing director, finance and operations (pictured), opened the briefing for analysts financial and business-to-business journalists, by saying: “It has been a good year. Solid results. We are +2% (sales) and we have gained market share. We are expecting sales growth to continually improve, despite a challenging environment.”

The major blight on the results is an €404m ‘impairment charge’ of  on Absolut vodka, which led to the group share of net profit falling 15%. Without that impairment charge, the group share of net profit would have been +25%. He said the brand had been hit by new levels of competition from new brands, “so-called craft vodkas” coming onto the US market which had put pressure on Absolut.

“We are confident that we can do a better job. We are changing the packaging and stabilising the brand in the US is a mid term objective,” he said. He went on to point that it was due to buying the premium Swedish vodka brand that Pernod had “cracked the (US) market and given the company a route to market, along with Jameson. He said 60% of Absolut sales were now “outside the US” and the brand was growing in other markets.

Chivas Brothers chairman and CEO Laurent Lacassagne said that whisk(e)y is the number one driver of growth with scotch expected to make up 62% of that growth. Chivas Regal and Ballantine’s Finest occupy the centre ground with Passport and 100 Pipers in the periphery and The Glenlivet dominating what the company describes as ‘craft and discernment’.

Lacassagne said Passport is +33% in Brazil and +30% in Mexico. While 100 Pipers is +20% in India. He acknowledged that particularly within the luxury sector in China, the company had lost market share. He predicted that they would regain “dynamism” through innovation.

New brands Chivas Extra and the flavoured ‘whisky’, Ballantine’s Brasil were in 37 and 23 markets respectively. He said there was “continuing growth in a satisfactory manner”.

Bogaert said later that he was confident that China would return in the mid to long term, particularly as the “new China” emerged with premium and super premium brands such as Martell Noblige and Ballantine’s Finest rather than the prestige sector, which has been restricted by the Chinese government.

Bogaert pointed out that Pernod Ricard is the market leader in China, so was the most exposed following the clampdown on extravagant entertaining and gifting. He said it is the only drinks company with a complete portfolio of alcoholic beverages and has 3,000 people “in the field”.

Pernod Ricard UK managing director, Denis O’Flynn said that the company’s brands were outpacing the market in all its drinks sectors and particularly in London.

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