Spring is in the air, at least for Pernod Ricard
Like Diageo, Pernod Ricard has been hard hit by de-stocking in the U.S. When it reported better-than-expected results for its past fiscal year at the start of September 2009, it warned that the wines and spirits industry will stagnate during its current fiscal year due to the economic downturn.
Now, Pernod Ricard says it will react to the first signs of a recovery in the global wine and spirits market by raising advertising spending.
Still, sales continued to fall in Pernod Ricard’s fiscal first quarter ended 30 September 2009. The world’s number two drinks company by volume after Diageo said sales were EUR 1.65 billion, compared with EUR 1.76 billion a year earlier, falling short of analyst expectations of EUR 1.71 billion.
Despite the drop in sales, Pernod Ricard’s performance looks good when compared to recent sales figures from Diageo and LVMH Moet Hennessy Louis Vuitton’s wine and spirits division.
French investment bank Natixis argued in a research note that competitors Diageo and LVMH were affected even worse by the global recession. Diageo’s like-for-like sales fell 6 percent, while LVMH’s wine and spirits like-for-like sales fell 11 percent. Pernod’s like-for-like sales declined 4 percent only.
Pernod Ricard, which makes brands including Absolut vodka, Mumm champagne and Seagram’s gin, said sales in Asia and other emerging markets grew 3.2 percent to EUR 514 million, up 3 percent on an organic basis, but that had been more than offset by an 18 percent drop in European sales, excluding France, to EUR 520 million.
Russia and Poland were particularly weak compared to strong figures a year earlier, Pernod Ricard said. Sweden, Greece and Portugal, however, posted growth.
Wine and champagne sales were hit hardest over the period, down 13 percent on an organic basis, while sales of spirits declined 2 percent on an organic basis.
