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Pernod Ricard attacks wine discounting

Drinks giant Pernod Ricard has attacked retailers for offering wine at heavily discounted prices, saying the strategy is leading to erosion of sales.

Talking to The Sunday Telegraph, Pernod Ricard’s chief financial officer Gilles Bogaert said: “We’re facing a decline in sales in wine. The wine business is less attractive than it used to be”.

His comments are backed up by figures from Euromonitor, which estimate that Pernod Ricard sold a litre of wine for an average price of £6.40 in 2005, compared with £5.95 in 2010.

"It’s got into a vicious circle where consumers expect a discount," said Jeremy Cunnington, an analyst at Euromonitor. "It has been exacerbated for the past two to three years," he said.

Euromonitor also noted that the group’s popular Jacob’s Creek brand saw volumes drop 19% in the UK last year after its average price rose by 25p to £5.15, while Diageo-owned rival brand Blossom Hill saw sales rise by 10% as its price fell by 6p to £4.29.

The group defended its strategy, saying it intends to preserve the brand as a premium one.

“It has a negative impact on the volumes but that’s the only strategy in the longer-term. In wine, if you start playing the volume game, in the end you will lose”, said Thierry Billot, Pernod Ricard’s head of brands.

Lucy Shaw, 13.06.2011

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