A dismal half-year performance for Jacob's Creek in the UK saw brand owner Pernod Ricard lose 1.1% in global wine sales during the period.
The brand's 3% fall in value eclipsed stellar growth by luxury brands such as Champagne Perrier-Jouët Belle Epoque, which rose 51%, and strong performances by Montana and Campo Viejo.
Pernod Ricard bosses said the brand's performance hit the UK business as a whole and admitted the British market remained difficult. "UK off-trade wine conditions have created a tough trading environment for us," said UK CEO Jean-Manuel Spriet. "The £4 to £5 price segment in UK wine is extremely competitive and still driven by deep discounting in the major retailers. Jacob's Creek suffered because of that and so did Pernod Ricard in the UK, where the brand is our biggest by volume."
The company denied the wine brand was in trouble, however, pointing out that it was still one of the most profitable. The average price in the UK was £4.74, whereas a New World wine cost £4.11 on average.
"We are avoiding the volume game and maintaining a policy of increasing bottle price by pushing the upper tiers of the brand, such as our sparkling range where we have 10% of the market," Spriet said.
Pernod Ricard is also adding a new £6.99 tier to the brand called Three Vines. "These new tri-varietal wines will sit between our core and reserve ranges and combine classic Australian blends with Mediterranean grapes for consumers who want to experiment," said chief winemaker Phil Laffer.
The brand did well in the US and Australia. There was also growth in Asia and the Americas through spirits, which helped it post 9.7% organic growth and a 7% rise in sales overall to €3.5bn in the six months to December.
The brand's 3% fall in value eclipsed stellar growth by luxury brands such as Champagne Perrier-Jouët Belle Epoque, which rose 51%, and strong performances by Montana and Campo Viejo.
Pernod Ricard bosses said the brand's performance hit the UK business as a whole and admitted the British market remained difficult. "UK off-trade wine conditions have created a tough trading environment for us," said UK CEO Jean-Manuel Spriet. "The £4 to £5 price segment in UK wine is extremely competitive and still driven by deep discounting in the major retailers. Jacob's Creek suffered because of that and so did Pernod Ricard in the UK, where the brand is our biggest by volume."
The company denied the wine brand was in trouble, however, pointing out that it was still one of the most profitable. The average price in the UK was £4.74, whereas a New World wine cost £4.11 on average.
"We are avoiding the volume game and maintaining a policy of increasing bottle price by pushing the upper tiers of the brand, such as our sparkling range where we have 10% of the market," Spriet said.
Pernod Ricard is also adding a new £6.99 tier to the brand called Three Vines. "These new tri-varietal wines will sit between our core and reserve ranges and combine classic Australian blends with Mediterranean grapes for consumers who want to experiment," said chief winemaker Phil Laffer.
The brand did well in the US and Australia. There was also growth in Asia and the Americas through spirits, which helped it post 9.7% organic growth and a 7% rise in sales overall to €3.5bn in the six months to December.
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