Australian wine, French anis take shine off Pernod Ricard sales
problems with its eponymous anis brands were the only low points in
an otherwise impressive set of financial results for Pernod Ricard
in 2004, writes Chris Jones.
The French wine and spirit group announced a 2.1 per cent rise in sales to €3.49 billion in 2004, reflecting a 5.8 per cent organic growth rate that was partially offset by disposals and currency exchanges.
It was Pernod Ricard's spirits division which was the main driver of growth, posting a 6.7 per cent sales organic growth rate, although the disappointing performance of the company's two main anis brands, after which it is named, continued throughout the year.
Pastis 51, the main Pernod brand, saw its volumes drop by 6 per cent to 1.8 million 9-litre cases, while stablemate and arch rival Ricard slumped 3 per cent to 6 million cases. Anis sales - which are concentrated mainly in France - have suffered from a slump in the French economy and a persistently downmarket image.
But there were much more impressive performances from whisky and Cognac brands Chivas regal and Martell, which have flourished under the management of the French group after being bought from Canada's Seagram in 2000.
Chivas sales grew by 12 per cent in 2004 to 3.3 million cases, making it the second largest spirit brand in the company's portfolio after Ricard. Martell, meanwhile, lifted its volumes by 7 per cent to 1.2 million cases. In both cases, Asia was the driving force behind the growth, with the premium blended Scotch in particular performing well in China.
In the US and Europe, it was Jameson (10 per cent), The Glenlivet (9 per cent), Amaro Ramazzotti (6 per cent) and Havana Club (7 per cent) which recorded the biggest increases. Indeed, Havana Club sales topped the 2 million case barrier for the first time, largely due to a 32 per cent increase in sales in Germany.
But if the spirits brands largely improved their performance in 2004, the company's wines fared less well. Jacob's Creek, the company's biggest single brand, saw its volumes rise 5 per cent overall in 2004 to 7.1 million cases but its fourth quarter domestic volumes dropped by 5 per cent as a result of major discounting by rival Australian brands which was not matched by Pernod Ricard.
Wyndham Estate, the company's premium Australian wine brand, saw its domestic volumes slump 19 per cent.
Along with France, a weak performance in Ireland, where the smoking ban had an impact on fourth quarter sales, and the continued flagging Polish vodka sales were the only disappointments in Europe, where Pernod Ricard said that the UK, Germany, Greece and Russia performed particularly well.
Europe, which accounts fro 40 per cent of group sales, showed organic growth of 3.5 per cent. The Americas posted organic growth of 8 per cent, while in Asia it was 12 per cent.
While analysts were broadly happy with the company's performance in 2004, Goldman Sachs noted that the organic growth performance was slightly shy of its own estimates (6.5 per cent) as a result of the weaker-than-expected performance in Australia in the fourth quarter.
But overall, the analysts welcomed the results, especially in light of the forecast of 8-10 per cent growth in operating profits for the year. This, GS pointed out, came despite a 20 per cent increase in media spend, reflecting Pernod Ricard's winning strategy of reinvesting the additional gains in gross margin delivered by its increasing focus on premium products.
