Sales up at Pernod Ricard but Absolut write-down hampers profits

Surging sales of Champagne and Irish whiskey helped Pernod Ricard grow sales grow 2% in 2014-15 but profits were lower than expected due to a €400 impairment on Absolut vodka, the firm’s full-year report has revealed.

The world’s second-largest spirits supplier said Absolut was hit by a “challenging” US market and the hefty write-down on this brand caused profits to drop 15% on the previous year.

But the group called it’s full-year results “solid”, bolstered by a 13% growth in volume sales of Mumm, 11% growth on Perrier-Jouet and a 9% rise on Jameson.

The Glenlivet grew 7% but Chivas Regal was down 1%.

Full-year revenue rose 8% to €8.56 billion, a reversal of last year’s 7% decline.

Chairman and chief executive Alexandre Ricard said: “Our full year results are solid, delivering improving sales and profit from recurring operations in line with guidance.

“Our strategy has remained consistent and is delivering results.

“For FY15/16, despite a challenging and volatile macroeconomic environment, we aim to continue gradually improving our business performance.

“We will continue to support priority brands and innovations while focusing on operational excellence.”

Sales were strong in Asia, particularly in India, according to Pernod Ricard, while sales in Europe were reported as stable.

Commenting on the performance of Jameson, Anna Malmhake, chairman and chief executive of the group’s subsidiary Irish Distillers, said: “The sustained progress of Jameson within the Pernod Ricard family of brands has been one of the group's most eminent success stories, experiencing 26 years of consecutive growth and driving the success of the Irish whiskey category.

“Jameson is the number one selling Irish whiskey in the world, an Irish export story we should be truly proud of. In addition, reaching number 15 in the International Spirits Brands Globally chart (Impact Ranking – Feb 2015) is a prominent achievement in another successful year for Jameson.

“As one of Ireland’s thriving exports, Jameson is playing a key role in the export led recovery of the Irish economy as we continue to embrace this progress by honouring our heritage while also delivering new and innovative expressions of Irish whiskey.

“However in stark contrast to this growth and optimism for our export markets, the outlook for our industry here in Ireland is extremely concerning. The penal excise increases on alcohol accumulated since 2013 endanger the export success of indigenous products such as Irish whiskey as well as the 92,000 jobs being supported by the drinks industry in every county throughout Ireland.

“In fact Ireland is one of the most expensive places in the world to buy Irish whiskey. A tourist visiting from New York has to pay almost €15 more when purchasing a bottle in Ireland than in New York. We regularly receive queries from visitors wondering why it’s so expensive to buy Jameson here. One has to ask, how sustainable is the current international growth of Irish whiskey without a solid local market in which to support home grown brands as well as new market entrants.

“The price of alcohol in Ireland is now the highest in the EU at 178% of the EU average (Eurostat) however this has only served to damage the industry and increase costs for responsible drinkers doing little to address misuse.

“The industry is acutely aware of the need to act on Ireland’s complex societal relationship with alcohol however I would urge the government to, first of all, reverse the excise increase from Budget 2014 in order to ensure the future commercial viability of drinks related enterprises in Ireland and secondly seek to tackle the serious issue of alcohol misuse with targeted measures such as addressing deeply discounted alcohol prices and employing evidence based solutions.
“A reduction in excise would give welcome relief to both hard working Irish consumers and the tourist trade visiting our country while also stimulating the growth of an industry which has huge opportunity for job creation.”

Related articles: