Americans Spending More on Spirits, Says Pernod Ricard CFO
By Gregg Greenberg
February 18, 2016
Americans spent more on spirits last year and they weren’t afraid to go top shelf, said Gilles Bogaert, chief financial officer at Pernod Ricard (PDRDY) .
Pernod, which is headquartered in Paris, saw organic sales growth of 3% in its fiscal first half, representing a continued gradual improvement over the previous year. The improvement was driven by sales in the Americas, which saw 4% growth compared with 2% the prior year. U.S. sales rose 3% over a flat prior year.
“Premium-ization has been a key driver in the U.S. with people buying more expensive products,” said Bogaert. “In our case Jameson has been the main driver of the growth, growing very fast at more than 20% growth.”
Boagaert added that Pernod has been spending a lot of marketing dollars on its premium vodka brand Absolut Elyx and it has been “growing in line with plan.”
As for the rest of the world, Pernod saw double-digit growth in India, Africa/Middle East and Australia, while Chinese sales fell 2%. Bogaert said the company is broadening its reach outside the elite class in China, admitting that it takes time to build a brand.
“In sub-Saharan Africa we have opened five affiliates in the last few years in five promising countries and we mainly sell global imported brands there,” said Bogaert.
The company’s European sales improved 1%, driven by Spain and the U.K., compared to a flat prior year. On the flip side, the company saw its sales in France and Russia decline.
Pernod saw growth across its top 14 brands, including strong performances by Jameson, Martell, The Glenlivet and Perrier-Jouët. That said, the company had trouble with its Chivas and Absolut brands, although Absolut picked up momentum in the U.S.
“Advertising and promotional expenses represent 1.6 billion Euro, it’s by far the largest investment that we do and within our A&P investments, digital now represents 25% of the whole investment and it’s probably the main revolution we have in the industry,” said Bogaert.