Citing a slowdown in Scotch following a “difficult year” in Asia and persistent difficulties in Spain, Pernod Ricard still posted record organic growth for The Glenlivet (+22%) and Chivas Regal (+5%).
Group sales rose 4% to €8.575bn ($11.3506bn) on an organic basis for FY 2012-2013 ending June 30, while net profit rose 3% for the year to €1.208bn, and Pernod Ricard cut its net debt by €635m.
Revenue in emerging markets rose 10% to €3.51bn but mature market sales were flat at €5.065bn; emerging markets accounted for 41% of sales, up 1% from 2011/12.
In 2012/13 the more profitable emerging markets – Europe, Asia/ROW and The Americas – accounted for 44% of Pernod Ricard profits versus 41% last year.
Bad news for Ballantine’s…
But the bad news was that Ballantine’s brand sales fell 6%, of which 4% was due to volume and 2% due an unfavourable price/mix, as Pernod Ricard shipped 5.9m nine-liter cases in the full year, compared with 6.3m in 2011/12 – last August the brand posted flat year-on-year sales.
Santandar analyst Antony Bucalo asked during yesterday’s earnings call: “On your Top 14 brands, it looks like Ballantine’s is the one that’s really struggling here. Do you see a medium-term turnaround, where you can perhaps stabilize the brand, or perhaps get it back to growth?”
Alexandre Ricard, said: “Our focus on Ballantine’s is indeed both Mexico and Brazil. The brand is struggling a bit, indeed. We have a whisky portfolio strategy in the region starting with Passport, which is performing particularly well.
“Ballantine’s, which we are still investing behind, Chivas (performing well) and in parallel with that Absolut…And it’s fair to say that with Ballantine’s we’ve struggled a bit behind the brand.
“But it takes time to build a brand.”
Tough times in Spain, South Korea
Gilles Bogaert, MD, finance, added: “The brand is being hit by the fact that it’s strong in two markets that are tough for whisky, Spain and South Korea. And clearly the growth will come from the ambition we have in Latin America, Eastern Europe and in France.”
In South Korea sales fell 2% due to on-trade declines, and continued economic woes in Spain hit sales of Ballantine’s (sales fell 7% overall in this market) but it grew in Russia and The Ukraine
Scotch whiskies also declined slightly in Asia and ROW – largely due to China, South Korea and Thailand, Indian whiskies remained buoyant (+6%).
This was partly due to Pernod Ricard taking specific brands upmarket, with 2012 launches such as Royal Stag Barrel Select and Blender’s Pride Reserve Collection.