Pernod Ricard’s sales fall 14.5% in Q3

Spirits giant Pernod Ricard’s global sales fell 14.5% in its third financial quarter as the widespread closure of bars and restaurants took effect.

Alexandre Ricard

Pernod Ricard’s sales fell organically to €1.73 billion (US$1.86bn) in three months ending 31 March 2020.

And for the nine-month period to 31 March 2020, Pernod Ricard’s organic sales fell 2.1% to €7.2 billion.

In the year to date, sales in the US grew 3%, led by brands such as Jameson whiskey, The Glenlivet, and Malibu rum, although there was a significant slowdown in the third quarter “due to confinement and physical distancing measures implemented in most States,” it said.

In China, sales “severely” plummeted by 11%, which the group blamed on on-trade closures starting at the end of January. Sales were also impacted by the cancellation of Chinese New Year celebrations.

Sales in India grew by 1%, compared to 19% growth in the nine months to February 2019, but the country’s own nationwide lockdown imposed on 24 March hurt this year’s Q3 performance.

The company’s global travel retail business was one of the hardest hit, with “severe decline from February,” of 13%,  driven by restrictions and lockdowns imposed across the world.

In Europe, sales have remained “stable” so far, with 2% growth in the year to-date, but the company’s “good performance to February” was severely impacted by a “double digit decline” in March once lockdown measures started come into effect.

The Jameson whiskey owner said that the Covid-19 outbreak will have “widespread repercussions” on business last month, and expects operating profit to fall by 20% in FY20. The company had initially expected that the virus could cause a 2% fall in its FY2020 sales.

Alexandre Ricard, Chairman and Chief Executive Officer, said, despite the blow, Pernod Ricard H1 sales through the start of Q3 were “solid, thanks to the implementation of our Transform & Accelerate strategic plan.”

As part of this plan, which launched in 2019, the company said it was to merge its two French businesses, Pernod and Ricard, which would lead to 280 jobs being open to voluntary redundancy.

“Since then, the Covid-19 pandemic has led to a significant deterioration of the environment across the globe.”

“I would like to praise the exemplary behaviour of our teams and their impact on their respective communities around the world at this very difficult time.

“Under current assumptions of the impact of Covid-196, we are confirming our guidance of an organic decline in Profit from Recurring Operations for full-year FY20 of c. -20%.

“We are staying the strategic course while implementing a comprehensive action plan to mitigate costs and tightly manage cash. Thanks to our solid fundamentals and strong liquidity position, I am confident in Pernod Ricard’s ability to bounce back from today’s challenges to achieve its growth potential.”

Pernod Ricard said sales of “strategic local brands” fell by 1%, while “speciality brands” grew 13% thanks to Lillet apéritif, Altos Tequila, Redbreast Irish whiskey, Monkey 47 gin, Aberlour Scotch whisky and Del Mageuy mezcal.

It comes as little surprise then, that the group is investing in more speciality brands. After recent investments in aperitivo Italicus and Japanese gin Ki No Bi, French drinks group Pernod Ricard bought the remaining stake in German gin brand Monkey 47 at the end of March.