Pernod Ricard to 'monitor' cannabis legislation before investing

31 August, 2018

Pernod Ricard CEO Alexandre Ricard said the company will wait to see how cannabis legalisation effects the sales of premium spirits before investing in the emerging industry.

Ricard attended the Pernod Ricard Round Table event at Artesian bar, London to discuss the company’s recent FY18 results and was joined by; Jean-Christophe Coutures, CEO of Chivas Brothers, Laurent Pillet, managing director of Pernod Ricard UK and Louise Ryan, managing director of The Gin Hub.

Ricard said: “We’ve been monitoring the situation (of cannabis legalisation) for one clear reason, we’re waiting to see whether or not the legalisation of cannabis will effect the consumption of premium spirits. At the moment there is no evidence that cannabis is cannibalising the market share of premium spirits but it is too early to be clear on this yet.”

The FY18 results revealed total sales of €8,987m, down -0.3% on FY17 while organic sales growth accelerated to +6.0% from +3.6% last year. The figures also highlighted the continued decline of vodka in the US, rise of Irish whiskey and the return to strength of Scotch.

Another category which less advertised in the results was rum. Ricard added: “Havanah Club grew 6% and it is the third biggest rum brand in the world, despite not having access to basically 40% of the global market – the US. The growth is driven principally by the dynamic tourism in its domestic market of Cuba but also by various export markets.”

Following the release of the FY18 results, Irish Distillers came under criticism from smaller producers claiming that the dominance of Jameson, which grew 14% on 2017, was limiting the growth of smaller brands.

Pillet said: “We are committed to developing young distillers and right now we are mentoring 45 of them to try and help other brands develop. It’s good for the market share to come down because we cannot grow the Irish whiskey category with just Jameson.”

Earlier this year Pernod Ricard launched Beefeater Pink which has shown significant growth and Ryan, who took charge of The Gin Hub in July, believes that the gin category will have further growth.

Ryan said: “I think the gin category is still underdeveloped. Consumers are looking for craft brands with authentic stories and I think gin can deliver on all of these. There are new gins launching almost daily around the world and with journalists and bartenders talking about gin it’s continuing to push the gin boom.”

As gin continues to grow in international markets, the opposite has happened with vodka, especially in the US with Diageo’s Smirnoff and now Pernod’s Absolut now showing decline.

Ricard added: “In the US vodka is still second behind whisky, so it’s not like it’s a small category. It’s a challenging and competitive category and it hasn’t grown as much as whiskey or tequila in the US but it’s still there and outside the US, Absolut grew 6%.”

Keywords: pernod ricard

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