Pernod Ricard is not reconsidering price increases in the UK, despite its off-trade sales declining at a faster rate than the broader spirits category.
The Absolut, Beefeater and Jameson maker saw its UK off-trade sales slip by “high single digits” in value in the 26 weeks ended 30 December 2023, against a spirits category that declined by “low to mid single digits”, Pernod Ricard UK MD Julia Massies told The Grocer.
Massies blamed the fall on “quite a lot of bargain hunting” taking place in the booze aisle in the run-up to Christmas. She added the situation was most prevalent in supermarkets, with its sales in impulse and convenience flat.
“We’re confident in the UK consumer ahead, but there is a pinch point at the moment with inflation having hit all consumer categories,” she said. “We are seeing more alert pricing behaviour in the off-trade.”
Despite this, she said the business had no plans to reverse “high single-digit” price increases taken over the past year on its brands to claw back market share.
“We will be considering pricing and promos going forward as we normally would,” Massies said. “We look at our elasticities carefully and price accordingly. But we will not be winding back in any of our pricing.”
A 70cl bottle of Absolut Blue Original Swedish Vodka in Sainsbury’s currently costs £23 before any promotions, 9.5% more than it was a year ago [Assosia 52 w/e 8 March 2024].
Beefeater London Dry Gin 70cl, meanwhile, has climbed by 6.8% in Waitrose, and now has a pre-promotional price of £19.75.
Quizzed on why Pernod Ricard had grown spirits sales in the on-trade while slumping faster than the wider category in grocery, Massies said consumers in the latter channel were more likely to trade down, which was hitting sales of the group’s posher brands.
She said: “When you visit a supermarket, you may be more attentive to price and promos than when you visit the on-trade, where it’s more about rewarding yourself and [therefore] a better opportunity for premium brands.”
However, Pernod Ricard was “not taking our eyes off the off-trade”, Massies said, pointing out that 80% of its UK sales came from the sector.
“It’s just a question of weathering it out in grocery in the coming months,” she added.
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