French drinks group Pernod Ricard reported a 6% sales decline in the first quarter of fiscal 2021 and expects sales to return to growth by the second half of its financial year.
During the three months to 30 September 2020, sales totalled €2.236 billion (US$2.65bn), a drop of €248m (US$294m) over the same period last year.
Alexandre Ricard, chairman and chief executive officer at Pernod Ricard, said: “Our first quarter is encouraging. Sales were still in decline, but the business has recovered significantly vs Q4 FY20, thanks to the partial reopening of the on-trade and the strong resilience of our brands in the off-trade.”
Despite growth of 22% and 12% in the UK and Germany respectively, Pernod reported a 5% drop in sales across Europe. According to the company, sales were down in France (-2%), Spain (-26%) and by double digits in Russia.
Asia and the rest of the world fell 12% during Q1, hampered by a 13% decline in India and a drop of 42% in South Africa due to strict alcohol sales regulations in the period. Pernod posted a 4% growth in China.
Sales in the Americas were up 5% during Q1, boosted by a 6% increase in the US. Rising sales in the US were attributed to resilience in the off-trade and the reopening of the on-trade. Irish whiskey brand Jameson witnessed “good growth” in the US, driven by the Original bottling and continued development of Black Barrel and Jameson Cold Brew.
Canada also posted “strong growth” driven by Absolut vodka and The Glenlivet Scotch whisky, while Mexico was also in growth during the period.
By category, sales of Pernod’s strategic international brands fell by 10% in Q1 due to “significant declines” for Martell Cognac, Chivas and Ballantine’s Scotch whiskies as a result of dwindling global travel retail sales.
However, there was strong growth for Malibu rum liqueur and The Glenlivet Scotch whisky, as well as resilience for Jameson.
The French group’s strategic local brands fell by 6% in the period due to declining sales of Seagram’s Indian whiskies. Double-digit growth of Kahlúa coffee liqueur, Ramazzotti amaro and Passport and Wiser’s whiskies was not sufficient to offset this.
Fortunes were improved for Pernod’s specialty brands, which grew 30% during Q1 due to growth for Lillet vermouth, Malfy gin, Aberlour Scotch whisky, Avión and Altos Tequilas, and Monkey 47 gin.
Looking ahead, Ricard added: “For FY21, we expect continued resilience of our business in an uncertain and disrupted environment. We will continue to implement our strategy, in particular accelerating our digital transformation. We will tightly manage costs while maintaining the agility to reinvest to adjust to market opportunities.”
Pernod Ricard expects Q2 of fiscal 2021 to “still be strongly impacted by Covid-19” but predicts sales will return to growth in the second half of the financial year.
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Author: Owen Bellwood