Pernod Ricard UK has blamed “historic” duty rises on spirits last year for its sluggish performance in grocery.
Duty increases of 10.1% that kicked in last August had caused the price of spirits on sale in supermarkets to increase by more than £1 on average, said PRUK managing director Julia Massies.
These price increases “quite logically sent the market into decline”, she said, adding the duty hike had created a “lose-lose” scenario, with HMRC also seeing a 7% reduction in alcohol duty receipts due to falling consumption.
Read more: After August’s duty hikes, is it any wonder booze prices are driving inflation?
“In grocery in particular it has led to behaviour of bargain hunting and some de-premiumisation,” Massies said.
PRUK’s sales by value across wine, spirits and RTDs slid by 3% in the year ended 30 June 2024.
Massies said off-trade sales had fallen by a similar figure, but admitted volume declines were larger still due to the group’s unwillingness to discount too sharply on its stable of brands, which includes Absolut vodka and Jameson whiskey.
“It is not our game to chase prices to the bottom,” she said.
Elsewhere, it was “business as usual” for Pernod Ricard’s wine division in the UK, Massies said, despite the group having agreed a deal to sell its ‘strategic wine’ portfolio to Accolade in July.
“We have the business for the whole of this fiscal year so we’re focusing on the business as usual and on delivering our plans,” she said.
Around a fifth of Pernod Ricard’s turnover in the UK was attributable to wine, a figure that had declined significantly in the past two decades, Massies said.
“Today we’re very much a spirit-led business,” she said. “Wine is 20% of the turnover and obviously it’s less in terms of profits.”
Asked if PRUK cut jobs following the decision to offload brands like Campo Viejo and Jacob’s Creek to Accolade, Massies said: “We actually have very few people who are dedicated to wine. But of course, we will, in due course, need to look at the impact on the company.”
At a group level, Pernod Ricard reported a 1% dip in organic sales for the year ended 30 June. Operating profits, meanwhile grew organically by 1.5% to €3.1bn.
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