Pernod Ricard plans for continued uncertainty and volatility

By Rachel Arthur contact

- Last updated on GMT

Pic:getty/5PH
Pic:getty/5PH

Related tags: Pernod ricard, Wine, spirits

Releasing its FY20 results today, Pernod Ricard says it has proved its resilience during the coronavirus pandemic but expects continued uncertainty and volatility in the market moving forward.

Specialty brands were the bright spot for Pernod Ricard in its FY20 sales, with most of the rest of the portfolio taking a hit from the crisis like other businesses. Specialty brands grew 7%, particularly thanks to growth of Lillet, Altos and Redbreast.

Across the rest of the portolio, strategic international brands (such as Martell, Chivas Regal, Absolut and Ballantine’s) were down 10%, strategic local brands were down 9%, and strategic wines were down 4% (mainly due to Jacob’s Creek, despite growth of Campo Viejo).

'I am confident Pernod Ricard will emerge from this crisis stronger' 

Pernod Ricard sales for FY20 totalled €8,448m, with an organic decline of -9.5%.

The French wine and spirits giant, however, champions its performance against a difficult backdrop. During FY20, it gained or held market share in its top 10 markets: gaining share in India, Japan, Germany, France and its Global Travel Retail division; while holding share in the US, Canada, China, Spain and Russia.

Alexandre Ricard, Chairman and CEO, said: “The Group has proven very resilient through FY20 and demonstrated its agility and ability to keep its supply chains operational, control costs and manage cash.

“For FY21, Pernod Ricard expects continued uncertainty and volatility, in particular relating to sanitary conditions and their impact on social gatherings, as well as challenging economic conditions.

“We anticipate a prolonged downturn in Travel Retail but resilience of the off-trade in the USA and Europe and sequential improvement in China, India and the on-trade globally.

“We will stay the strategic course and accelerate our digital transformation while maintaining strict discipline, with clear, purpose-based investment decisions. We will harness our agility to adjust fast to capture new opportunities. Thanks to our solid fundamentals, our teams and our brand portfolio, I am confident that Pernod Ricard will emerge from this crisis stronger.”

Bright spots: US gin, mezcal, and Jameson innovations

Jameson Irish Whiskey was another bright spot for Pernod Ricard, seeing just a 1% drop in sales thanks to growth across a number of global markets and particularly resilience in the US.

The brand saw continued double-digit growth in Germany, Poland, Japan, China, Australia and West Africa during H2 (January to June 2020) as the pandemic hit; and in the US it saw double-digit growth in the off-trade as consumers turned to tried and trusted brands. The on-trade, however, was significantly affected: notably by the cancellation of St Patrick’s Day celebrations in March.

Over the year, Jameson Original gained share in key priority markets, such as the US, Ireland, Germany, France, South Africa and Australia. Jameson Black Barrel – a triple-distilled whiskey matured in a combination of oak, sherry and double charred black barrels – saw continued strong growth at 14%.

Meanwhile, new innovations Jameson Cold Brew (a flavored spirit with coffee) and Jameson Triple Triple (launched last year in travel retail) saw an ‘early positive response’.

Pernod Ricard’s Specialty Brands portfolio grew 7% in the year. In the US, Aberlour saw 14% growth while Redbreast also enjoyed double-digit growth.

Monkey 47 – the German Black Forest gin brand that Pernod Ricard acquired a majority stake in in 2016 – was impacted by on-trade closures in Europe. However, its international expansion into the US enjoyed ‘very strong growth’ with double-digit growth in this market in H2.

Pernod Ricard’s agave portfolio also saw strong growth, particularly in the US: with Avion, Altos and Del Maguey all seeing single or double digit growth.  

Absolut_Vodka_Sodas_and_Cocktails

Absolut vodka, however, saw a ‘challenging year’. H1 sales pre-pandemic declined 1%, while H2 sales declined 24%: attributed to the impact in on-trade and travel retail.

However, Pernod Ricard says the brand has benefited from consumers returning to known and trusted brands in the off-trade.

It is also being spurred on by the launch of innovations such as Absolut Juice in the US (the 35% ABV vodka in strawberry and apple flavors was launched last summer), and an emerging presence in the booming RTD category with Absolut Soda and Absolut Cocktail cans (the 5-10% ABV RTD drinks hit shelves in the US in May).

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