Pernod Ricard saw net sales fall 7% in the first nine months of the year as the Asian market proved challenging.
The French drinks giant, owner of Absolut, Havana Club and Malibu, said today a sales fall of 3% in Asia and the rest of the world in the nine months to 15 April was due to destocking in China. There were also challenges in South Korea and Thailand, the company said, although India returned a good performance.
Pernod Ricard also blamed “highly unfavourable” foreign exchange for the sales decline. Without it, sales were stable, it said. Net sales in the nine months stood at €6.2bn, down from €6.7bn last year.
It insisted performance was in line with its annual guidance despite the “challenging” environment. In February the company slashed its profit forecast by 2-3pts to 1-3%.
Organic growth in the first nine months of 2013/14 was flat overall, it said today, but there was stability across its European markets, while Eastern Europe posted growth of 9%.
There was also organic growth in the Americas, up 4%, driven by a good performance in Brazil. Growth in the US, although still “good”, had slowed slightly in the third quarter, Pernod Ricard added.
The company also announced it was beefing up its American wine portfolio with the acquisition of Kenwood Vineyards in California. Kenwood’s brands, including Kenwood Reserve, Sonama and Jack London, are sold primarily into the US domestic market. Earlier this month it signed new distribution agreement with its largest distributor in the US.
CEO Pierre Pringuet said the acquisition fitted within Pernod Ricard’s multi-origin wine portfolio and illustrated its ability to “seize tactical growth opportunities” that could benefit its portfolio within key markets.
Key local brands posted strong growth, it said, up 5%, but net sales of its top 14 brands fell 1% on flat volumes in the first nine months of the year.
Jameson sales grew 13% on volumes up 10%, while champagne Perrier-Jouet grew 17%, on volumes up 8%.
Some Scotch whiskies returned to growth, the company said, with Glenlivet up 9% on volume growth of 1%. However sales were flat on Absolut and volumes fell on Chivas (down 6%), Martell (down 9%) and Royal Salute (down 9%).
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