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Pernod Optimistic Over Year-End Sales in U.S.

Posted on  | December 16, 2011   Bookmark and Share
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French spirits group Pernod Ricard is optimistic over sales prospects for the end of the year in the United States, a recovering market where it aims to take market share.

The world’s second-biggest spirits group behind Britain’s Diageo may also further raise prices in some of its drink categories in the U.S. but has no plans to do so for Absolut vodka in the next 12 months, Philippe Dreano, Chairman and CEO of Pernod Ricard Americas, said on Thursday.

Dreano told analysts during a conference call Pernod and Bean Inc had agreed to end a distribution contract for Beam’s Sauza tequila in Mexico, but the impact on Pernod would be “minimal” as the brand made less than 5% of Pernod’s profit in Mexico.

“We are quite positive on the outlook for year-end sales,” Dreano said, when asked to give a view on trading conditions in the United States after Thanksgiving.

“Data from Black Friday are quite excellent,” he added. He said there had also been good feedback from the group’s distributors.

Pernod Ricard claims the number-three spot in the United States, a market where the group makes 52% of its sales in the Americas region, which also comprises Canada, Mexico and Brazil.

In the last 10 years, Pernod has expanded in the region through organic growth and three major acquisitions — Seagram in 2001, Allied Domecq in 2005 and Absolut in 2008.

The Americas region is the second-largest contributor for Pernod behind Asia, making 29% of group profit from recurring operations in fiscal year 2010-11.

Growth in the region has been fuelled by a recovering U.S market and fast-growing emerging markets of Brazil and Mexico, where Pernod claims the number one spot.

In the United States, Pernod said it is was well positioned to grow thanks to a portfolio of six premium brands — Absolut vodka, Jameson whisky, Malibu rum, Chivas Regal, Glenlivet whisky and Kahlua liquor.

The six brands account for 60% of its U.S. volumes and over 85% of marketing spend.

Pernod successfuly raised Glenlivet and Jameson prices in the U.S. two months ago and will “continue to be pro-active” on that front, Dreano said.

In October, the Pernod Ricard group said it was targeting a rise of close to 6% in underlying operating profit in the year to June 2012, thanks to Asia and a recovering U.S. market, as it expected slow growth in its mature markets.

From Reuters, December 15th, 2011


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