Pernod Ricard this week blamed a 3% dip in sales on its decision to steer clear of deep discounting in a bid to maintain the premium credentials of key brands.
Speaking at the group's sales update this week, UK boss Jean-Manuel Spriet revealed global sales had fallen to £3.3bn over the past six months and that volumes had also been hit.
But, he said, it was important the company protected the premium profile of brands such as Absolut.
"The competitiveness of the off-trade in the UK is very noticeable," said Spriet. "There's a lot of pressure on prices and huge pressure on margin. We believe that in the current context, the key to success is to keep building our brands. We are confident that we are consistent in our price positioning and our strategy. This is a long-term investment."
Although Pernod does not break down sales data for individual markets, it admitted that committing to price hikes in the UK had resulted in lower off-trade sales for Absolut in the second half of 2009, although it stressed that it had seen growth on a global scale. In a bid to premiumise the vodka brand, Pernod upped the price of a bottle by £1.50 last year.
Its wine portfolio which includes Jacob's Creek, Campo Viejo and Montana also had a challenging year.
Creeping excise and deep discounting meant the category was facing "great turbulence", according to Spriet, who highlighted the slumping exchange rate between the pound and Australian dollar as a major issue for Jacob's Creek and Wyndham Estate.
The group blamed the 15% volume decline of Jacob's Creek [Nielsen 52w/e 12 December 2009] on its policy of defending the brand's premium price positioning and its refusal to make heavy discounts.
"Premiumisation is not something that happens alone; you need to invest behind the brands to justify the price difference," said Gilles Bogaert, managing director of finance at Pernod, who claimed that advertising and marketing expenditure had stayed at a high level over the past six months.
Speaking at the group's sales update this week, UK boss Jean-Manuel Spriet revealed global sales had fallen to £3.3bn over the past six months and that volumes had also been hit.
But, he said, it was important the company protected the premium profile of brands such as Absolut.
"The competitiveness of the off-trade in the UK is very noticeable," said Spriet. "There's a lot of pressure on prices and huge pressure on margin. We believe that in the current context, the key to success is to keep building our brands. We are confident that we are consistent in our price positioning and our strategy. This is a long-term investment."
Although Pernod does not break down sales data for individual markets, it admitted that committing to price hikes in the UK had resulted in lower off-trade sales for Absolut in the second half of 2009, although it stressed that it had seen growth on a global scale. In a bid to premiumise the vodka brand, Pernod upped the price of a bottle by £1.50 last year.
Its wine portfolio which includes Jacob's Creek, Campo Viejo and Montana also had a challenging year.
Creeping excise and deep discounting meant the category was facing "great turbulence", according to Spriet, who highlighted the slumping exchange rate between the pound and Australian dollar as a major issue for Jacob's Creek and Wyndham Estate.
The group blamed the 15% volume decline of Jacob's Creek [Nielsen 52w/e 12 December 2009] on its policy of defending the brand's premium price positioning and its refusal to make heavy discounts.
"Premiumisation is not something that happens alone; you need to invest behind the brands to justify the price difference," said Gilles Bogaert, managing director of finance at Pernod, who claimed that advertising and marketing expenditure had stayed at a high level over the past six months.
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