Pernod Ricard forecasts return to growth in second half

Pernod Ricard has forecast its sales will return to growth in the second half of its financial year, but it said the Covid-19 crisis will still have a major impact on the business.

For the first quarter of the 2021 financial year, organic sales for the overall business declined by 6%, compared to the expected 10% drop. The first quarter represents a “marked improvement” on the previous quarter, thanks in part to the partial reopening of the on-trade and continued strength of its brands in the off-trade.

The owner of Absolut, Martell cognac and Malibu recorded a big hit in sales for the final quarter of 2020 due to coronavirus. It’s worst hit sector was travel retail, which accounts for 6% of the global group’s sales. The closure of restaurants and bars in the UK and across Europe also affected sales.

In contrast, off-trade sales across Europe and in the US, have remained “very resilient” for the company, aided by a rise in staycations.

Alexandre Ricard, chairman and chief executive officer, said: “Our first quarter is encouraging. Sales were still in decline, but the business has recovered significantly versus the fourth quarter of the previous financial year, thanks to the partial reopening of the on-trade and the strong resilience of our brands in the off-trade.

“For FY21, we expect continued resilience of our business in an uncertain and disrupted environment. I would like to take this opportunity to praise our teams, whose engagement and performance are exemplary in these very challenging times. We will continue to implement our strategy, in particular accelerating our digital transformation. We will tightly manage costs while maintaining the agility to reinvest to adjust to market opportunities.”

The company’s international brands, including Martell, Chivas and Ballentine’s, saw a decline of 10% globally, mostly due to travel retail. Some brands in this sector – Malibu, Jameson and The Glenlivet – recorded stronger growth.

Speciality brands, including Monkey 47, grew by 30% while “strategic wines” grew by 9%, driven by double-digit growth from Campo Viejo and Brancott Estate and 8% growth for Jacob’s Creek.

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