UK. At a press conference in London detailing the group’s above-target results, joint managing director director Pierre Pringuet said further consolidation in the drinks sector was likely and Pernod Ricard wants to be a part of it. “Consolidation of the industry will continue,” said Pringuet. “But I cannot make predictions because clearly companies are not for sale like in the supermarket. Even in June 2000, nobody suspected the Seagram business was for sale,” he said.
Following a successful year in which the group reached its debt reduction targets and doubled operating profit in the Wine & Spirits division (+106%) the message was that Pernod Ricard is now poised for further growth, despite the economically dangerous period the world is entering. The group network is now firmly established in all regional markets and there are some rising stars aside from sales growth at most of the core brands last year. 2002 sales of Havana Club were up +11.6%, Jameson +6.6%, Jacob’s Creek +11.6% and The Glenlivet +2.3%. Other brands such as Chivas Regal (-9.1%) and Martell (-10.5%) recovered from a bad start in the first half of the year. Seagram’s gin “stablised” with sales at -0.4% for the year.
The Wine & Spirits division generated sales of €3.4 billion (US$3.8 billion) in 2002, up +78%. Of this total, €1.4 billion (US$1.5 billion) was attributable to Seagram brands and €2 billion (US$2.3 billion) to Pernod Ricard’s historical brands, giving organic growth of +4.5%. Operating profit was €710 million (US$747 million), a rise of +106% (and +7.5% commercial organic growth). This was achieved by rationalising distribution costs, overheads and expenses, while maintaining a high level of advertising and promotional investment at 21.4% of sales. The operating margin of the Wine & Spirits division was 20.8%, higher than the target figure announced in early 2002. This result reflects the successful integration of Seagram, said the company.
The group also made a “strong” start to 2003 but declined to give figures. For this year Chivas Regal is forecast for growth in Europe. “We will master the brand better this year than last year,” said Chivas Brothers chairman and ceo Georges Nectoux. Asia is also returning to “natural growth” with growing interest in malt whiskies in those markets. The group is also pledged to maintain a high marketing and promotion expendiure at 20% of sales. Longer term the Indian market is growing and Pernod reported strong growth of the Indian whiskey Royal Stag. 100 Pipers Scotch whisky contrinues to be extremely successful in East Asia, Spain and Latin America.
But Pernod Ricard warned of the uncertain economic factors on the horizon. “A slowdown in Europe is expected and the situation in Latin America is still risky,” said Pierre Pringuet. “In particular the more medium term implications of the war are uncertain.”
