Travel retail offsets China for Pernod Ricard

By Charlotte Turner |

Pernod Ricard reported sales of €6,186m for the first nine months of the 2013/14 financial year, and highlighted the company’s ‘very good performance’ in India and travel retail, However, the situation remained difficult in Korea and Thailand.

 

Pernod Ricard says that, in line with the first half-year, sales were stable excluding foreign exchange and Group structure effects. The reported decline was -7% ‘due to a highly unfavourable foreign exchange effect’.

 

In Asia/Rest of World (-3%), sales were impacted primarily by China where the decline was exacerbated by destocking in the third quarter as anticipated. Excluding China, sales growth was +5% over the nine months compared to +2% in the half-year.

 

In the Americas (+4%), organic growth improved slightly compared with the half-year due in particular to the good performance in Brazil. Good growth in the US (+4%) continued to be driven by excellent price/mix but slowed down slightly compared with the half-year.

 

 

ENVIRONMENT REMAINS CHALLENGING

In Europe (+2%), Western Europe was stable whilst Eastern Europe posted growth of +9%. The third quarter was largely impacted by unfavourable technical effects (later Easter, excise duty increases, price increases, phasing of promotions, etc.).

 

Pierre Pringuet, Chief Executive Officer of Pernod Ricard, said: “In an environment that remains challenging, our performance over the nine months was in line with the half-year and with our annual guidance. I am pleased with the acquisition of Kenwood and with the strengthening of our partnerships with our two largest US distributors, which reinforce the Group’s portfolio and execution capability in the US.”

 

One of the highlights of the period was Pernod Ricard USA’s new agreement with with F. Korbel & Bros. to purchase assets related to Kenwood Vineyards located in Sonoma Valley, California. Brown-Forman distributes Korbel California Champagne widely in the US.

 

Top 14 organic sales growth for the first nine months of the financial year 2013/2014.

 

This acquisition reflects both Pernod Ricard’s confidence in the development of its wine portfolio and its ambitions in the United States, the largest market of the Group.

 

ACQUISITION TO CLOSE BEFORE END OF JUNE

Bryan Fry, Chief Executive Officer of Pernod Ricard USA, stated: “Thanks to its long heritage and premium positioning within the well-known Sonoma region, Kenwood offers a unique brand proposition that will strengthen the position of Pernod Ricard’s wine business in the United States.”

 

Pringuet added: “Kenwood will support the company’s ambition in wine and fits ideally within Pernod Ricard’s multi-origin wine portfolio strategy. In addition, this transaction illustrates Pernod Ricard’s ability to seize tactical growth opportunities that can benefit our entire portfolio in key markets such as the United States.”

 

The acquisition is expected to close before 30 June 2014.

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