 | |
Chivas Brothers Chairman & CEO Laurent Lacassagne described travel retail as a “channel for the future” | |
 |
Pernod Ricard has expressed confidence in the travel retail channel, despite recording weaker sales growth in Asia and steep declines in the Americas during the first half of its financial year.
The drinks company achieved overall net sales of €4,570 million in the six months to the end of December, with organic growth flat and reported growth down -7% year-on-year. It attributed this to the sharp fall in sales in China (-18%).
Within travel retail (which is integrated into results for each region), Pernod Ricard said it experienced “slight growth” in Asia-Rest of the World, affected by weaker sales and high comparative costs. Meanwhile, in the Americas region, it saw a double-digit decline in travel retail, with certain distributors destocking, commercial disputes and the weakening of some South American currencies.
Speaking at a breakfast meeting with media this morning (18 February), Pernod Ricard Vice Chairman & CEO Pierre Pringuet said the commercial disputes were limited to “Venezuela and some other South American countries”. He also said the recent performance in Asia had been “satisfactory”.
“Travel retail is a very important channel for us, and for premium and super-premium spirits in general,” he added. “It is clearly a focus and a priority.”
Chivas Chairman & CEO Laurent Lacassagne also spoke about the importance of the channel. “Travel retail is growing in a difficult environment,” he said. “In terms of consumer intake and attraction, it is a channel for the future because people have time to see our brands.
“We are developing store-in-stores. We’ve done it in Dubai for Chivas and in Hong Kong for Royal Salute. It is another way to reach consumers when their minds are free. [We can] bring them into our brand universe.”
In China overall sales have been hit by the macro-economic slowdown, stricter measures against conspicuous consumption – which affected gifting – a slowdown in price increases and an unfavourable quality mix.
Pringuet said: “We are not expecting any improvement during this fiscal year. That doesn’t change at all our vision for this market in the future. China will remain and become a stronger market for Pernod Ricard.”
Profit from recurring operations (PRO) registered organic growth of +2% and a reported decline of -7%. Pernod Ricard is predicting the difficulties in China will persist for the full financial year and has therefore lowered its PRO forecast for 2013/14 down to between +1% and +3% (compared to the forecast of between +3% and +5% in October).
The differences in the organic and reported figures were mainly due to the disposal of certain Scandinavian and Spanish activities in the previous financial year, as well as the unfavourable impact of foreign exchange.
 |
“We remain confident in the medium and long-term potential of China but we anticipate difficulties to persist for the full financial year,” said Pringuet. “We want to prioritise the group’s future sales growth through a sound commercial policy and an appropriate level of investment.”
Sales of its Top 14 brands were virtually stable, with the second quarter showing a return to growth. Among its 18 key local brands, volumes were up +9% and sales up +4%.
 |
 |
