PERNOD FEELS THE PAIN OF A DECLINING MARKET
In Pernod’s overall fiscal year ending June 30, sales rose 6.2% year on year, while organic growth was up 9.1%. The French company experienced a -2.8% negative foreign exchange effect, primarily due to the loss in value of the US dollar. The spirits business and wine business grew 11% and 1.3% organically for the full fiscal year. In the second half, spirits increased 9.4% and wine grew 4.5%. Favorable comparisons in both halves were related to the reduction in inventory following the Allied acquisition and an increase in brand investment. Fourth quarter consolidated sales rose 5.5% organically.
BEEFEATER AND KAHLUA REMAIN DIFFICULT. North American organic sales jumped 9.6%, with growth remaining “very strong” in the US, particularly in the fourth quarter. Jameson, The Glenlivet, Stolichnaya, Wild Turkey and Seagram’s Gin continued to expand. The US benefited from price increases, new A&P campaigns and expanded Kahlua and Malibu ranges. However, the overall situation remains difficult for Beefeater and Kahlua.
Chivas Regal registered modest growth with 12-month depletions up 2%. Pierre Pringuet, managing director, noted that the US market “is in slight decline,” so Chivas was still above industry growth (-3% Nielsen, 1% NABCA).
Jameson met with particular success in the US where 12-month depletions rose 21%. Meanwhile, Glenlivet depletions rose 9% in the US where Pierre says it currently gets about 90% of its volume.
Twelve-month depletions of Martell grew 4% in the US. Pernod says it plans to “significantly” increase the price of Martell, where sales volume is expected to decline.
Malibu depletions rose 9% in the US thanks to the launch of a new range of Tropical Banana. Kahlua, meanwhile, “remains difficult” in the US but saw some improvement in the 4th quarter thanks to the launch of Kahlua Hazelnut and French Vanilla. Twelve month depletions for Kahlua at the end of June were “stable” compared to -4% at the end of March.
Beefeater depletions were down -1%, which Pierre maintains was above the market. Stolichnaya, at the same time, saw depletions rise 6%, with a sharp increase in all other key markets.
Wine brands such as Jacob’s Creek, Campo Viejo, Montana, Perrier Jouët and Mumm Napa enjoyed very strong growth, especially from the 2nd half-year. Pierre mentioned that the drought in Australia is helping to rid some of its over-supply, and that Australian wines will soon return to more favorable pricing in the UK.
Mumm champagne depletions rose 1% in the US, while Perrier-Jouet saw a 14% increase.
QUESTIONS OF ABSOLUT, STOLI AND KAHLUA. During the question and answer section, Pierre was asked (once again) if Pernod plans on going after Absolut. [Ed. Note: They must get really tired of hearing this questions since they’ve confirmed multiple times that yes, indeed, they plan to go after Absolut.] Here’s what Pierre had to say:
“A lot of rumors, a lot of talks and not a day without some new quote from whomever. At the end of the day we will have to listen to the Swedish government, the owner of the brand. They did confirm the privatization would take place at the end of June from the treasurer, but he did say he will consider all options.”
“It’s been confirmed that the day the process starts, we’ll be there.”
When asked if Pernod could afford both Absolut and Stolichnaya, or would regulatory issues allow them to acquire both, Pierre answered, “no, and that’s why we’d be happy to have either one of them.”
Finally, why is Kahlua such a difficult brand? Pierre says the brand is appealing to the wrong demographic and should instead aim for a younger audience.
“Kahlua was a very trendy brand consumed by young adults, but unfortunately that was 20 years ago. And it seems Allied Domecq followed that group of consumers year after year which means today they are in their 50s instead of their 20s. Unfortunately, when you’re in your 50s you consume less alcohol and party less than when you are in your 50s. We need to make a complete shift in the strategy of the brand...we really need to rejuvenate the brand...we are in the process of developing new advertising.”
BEEFEATER AND KAHLUA REMAIN DIFFICULT. North American organic sales jumped 9.6%, with growth remaining “very strong” in the US, particularly in the fourth quarter. Jameson, The Glenlivet, Stolichnaya, Wild Turkey and Seagram’s Gin continued to expand. The US benefited from price increases, new A&P campaigns and expanded Kahlua and Malibu ranges. However, the overall situation remains difficult for Beefeater and Kahlua.
Chivas Regal registered modest growth with 12-month depletions up 2%. Pierre Pringuet, managing director, noted that the US market “is in slight decline,” so Chivas was still above industry growth (-3% Nielsen, 1% NABCA).
Jameson met with particular success in the US where 12-month depletions rose 21%. Meanwhile, Glenlivet depletions rose 9% in the US where Pierre says it currently gets about 90% of its volume.
Twelve-month depletions of Martell grew 4% in the US. Pernod says it plans to “significantly” increase the price of Martell, where sales volume is expected to decline.
Malibu depletions rose 9% in the US thanks to the launch of a new range of Tropical Banana. Kahlua, meanwhile, “remains difficult” in the US but saw some improvement in the 4th quarter thanks to the launch of Kahlua Hazelnut and French Vanilla. Twelve month depletions for Kahlua at the end of June were “stable” compared to -4% at the end of March.
Beefeater depletions were down -1%, which Pierre maintains was above the market. Stolichnaya, at the same time, saw depletions rise 6%, with a sharp increase in all other key markets.
Wine brands such as Jacob’s Creek, Campo Viejo, Montana, Perrier Jouët and Mumm Napa enjoyed very strong growth, especially from the 2nd half-year. Pierre mentioned that the drought in Australia is helping to rid some of its over-supply, and that Australian wines will soon return to more favorable pricing in the UK.
Mumm champagne depletions rose 1% in the US, while Perrier-Jouet saw a 14% increase.
QUESTIONS OF ABSOLUT, STOLI AND KAHLUA. During the question and answer section, Pierre was asked (once again) if Pernod plans on going after Absolut. [Ed. Note: They must get really tired of hearing this questions since they’ve confirmed multiple times that yes, indeed, they plan to go after Absolut.] Here’s what Pierre had to say:
“A lot of rumors, a lot of talks and not a day without some new quote from whomever. At the end of the day we will have to listen to the Swedish government, the owner of the brand. They did confirm the privatization would take place at the end of June from the treasurer, but he did say he will consider all options.”
“It’s been confirmed that the day the process starts, we’ll be there.”
When asked if Pernod could afford both Absolut and Stolichnaya, or would regulatory issues allow them to acquire both, Pierre answered, “no, and that’s why we’d be happy to have either one of them.”
Finally, why is Kahlua such a difficult brand? Pierre says the brand is appealing to the wrong demographic and should instead aim for a younger audience.
“Kahlua was a very trendy brand consumed by young adults, but unfortunately that was 20 years ago. And it seems Allied Domecq followed that group of consumers year after year which means today they are in their 50s instead of their 20s. Unfortunately, when you’re in your 50s you consume less alcohol and party less than when you are in your 50s. We need to make a complete shift in the strategy of the brand...we really need to rejuvenate the brand...we are in the process of developing new advertising.”
posted at 11:37 AM
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