Strong growth in Pernod Ricard’s wine portfolio

15th February, 2017 by Arabella Mileham

Pernod Ricard has claimed it is the ‘fastest growing supplier’ of branded wine in the UK after seeing strong growth in its Rioja brand, Campo Viejo and Jacob’s Creek.

Speaking at the Pernod Ricard Roundtable today, Laurent Pillet, managing director, Pernod Ricard UK said the company’s light wine portfolio grew 12.4% across the UK off-trade, against a slightly declining wider market (-0.2%). The category was growing four times faster than the average growth of its competitor’s brands, he said, with innovation of Campo Viejo Blanco contributing to the mix.

Campo Viejo rose 19.9% during Christmas, he said with its Tempranillo SKU becoming the biggest unique selling wine SKU on the UK market.

“It is an astonishing achievement for Campo Viejo,” he said.

Meanwhile the Australian Jacob’s Creek brand also saw growth of 17.9% over Christmas.

“What is even better is when you know that we’re selling at an average price the highest average price for wine suppliers in the UK market – it is £6.30 per bottle which is about £1 more than the average branded wine business in the UK,” Pillet added.

Online sales have also grown sharply, the company reported, rising 43% year on year, so that e-commerce now accounts for just above 6% of its UK sales, compared to 3% across all markets overall.

The country’s premium spirits segment, which includes Absolut Elyx and Champagne brand Perrier Jouet Belle Epoque, was also in rude health, delivering double digit growth, while gin sales rose 2.9% across the UK off-trade.

Plymouth Gin, in particular, grew more than twice as fast as the booming premium gin category, at around 47% compared to the 15% growth in the general premium gin category.

Alongside the strong wine and spirits sales, innovation had made a significant contribution – in the UK innovation contributed around 2.5% to sales – rising to 3.8% with the addition of new brands such as Monkey 47, ahead of the wider company’s 1% investment growth. New brand extensions highlighted by Pillet included Kahlúa salted caramel, Malibu pineapple and Malibu strawberry and kiwi RTD, and Campo Viejo White.

Pillet argued that the strong overall growth was particularly impressive when set against the uncertain backdrop in the UK.

“It confirms that our off-trade strategy is working,” he said. “I’ve spend 20 years in emerging markets which complexity and uncertainty prevails, and thought that coming back to Old Europe I would encounter more stability – which I have, but not as much as I thought!”

Brexit uncertainty

However Pillet refused to be drawn on whether the price of its products will go up as a result of the recent exchange rate fluctuations, despite arguing that long-term, the impact on margin was “not-sustainable”.

“The environment is uncertain and we have to look at that seriously,” he said, arguing that there were three main strands to look at in terms of the UK – optimising the cost of goods being imported into the UK (“especially wine”), operational efficiencies in terms of where staff and resources are allocated, and potential price increases.

“Long term, very transparently, [maintaining margin] is not sustainable, we are impacted on our margin because the cost of goods imported is more expensive in Sterling than it used to be in the past. On a temporary basis we can absorb part of it, but  in the long-term we need to impact part of this to our consumers. But there is no announcement [on that] today, we will just do it with our customers.”

“Is there some potential price incase we do do in that context?  On this one, if we do have to, we will reserve this discussion with our customers.”

 

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