Pernod Ricard saw a “slight decline” in its first-quarter results, driven by a marked slowdown in emerging markets compared to the same period last year and an anti-extravagance clampdown in China.
Net sales at the drinks giant slowed, with organic growth down 1% to €2,013m, but this was blamed on high comparatives last year, an unfavourable mix and a “highly unfavourable” exchange rate that hit both emerging markets and the US. Pernod insisted it remained on track to return organic growth of around 4% or 5% for the financial year.
Emerging markets saw growth falling from 13% last year to -2% this year, driven by a 6% decline in Asia-RoW. Chinese anti-extravagance measures prompted a “significant decline” at the premium end, the company said, and overall value shipments were down double-digits.
Mature markets fared better, with solid 3% growth in Western Europe (including France) and particularly good performance in the UK, France and Germany.
Eastern Europe also saw sustained growth of 8%, with sharp growth acceleration in the Balkans and Poland, although the high-end portfolio slowed in Russia. There was also a good performance in Japan, Australia, and double-digit growth in Africa-Middle East, but the stable US market was heavily affected by the poor exchange rate and sales were flat.
Brands
The company reported 1% growth in premium wine, driven by double-digit growth of Brancott Estate and Campo Viejo, but the larger Top 14 spirit and wine brands – responsible for 64% of group sales – saw a 5% decline, on volumes down 1%.
Only five of the Top 14 saw sales growth, with leading vodka brand Absolut in growth of 1%, on volumes down 3%. A “significant” decline in Martell, Scotch whiskies and champagne contrasted with the “excellent” performance of Jamesons and the resilience of white spirits.
Pernod’s 18 ‘key local brands’ – which include Indian whiskies and US brand Wiser’s, and which are targeted at emerging middle classes – grew 8%, on volumes up 11%.
CEO Pierre Pringuet said the company’s first quarter was adversely affected by the slowdown of emerging markets and “unfavourable technical effects”. “We remain confident in the diversity of our portfolio and the strength of our distribution network,” he added.
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