Pernod Ricard reports soft Q1 but stays confident on annual growth

Pernod Ricard has reported an “expected” 2% drop in its first-quarter sales due to weaker demand in China, but is “confident” about 2023-24.

Speaking about the results, Pernod Ricard chairman and CEO Alexandre Ricard said that the group had “experienced a soft start to the year, notably with the USA in decline, reflecting high comparison basis and a normalising market context”.

Ricard explained: “We also cycled high comparatives in China coupled with soft consumer demand. This was partly offset by a very dynamic performance in the rest of Asia, modest growth in India, resilience in Europe, and stability in travel retail.”

Sales for the first quarter totalled €3,042 million (US$3.20 billion), an organic decline of -2% and -8%, partly offset by the group’s structure.

According to Ricard, consumer demand remained “resilient” over the summer as the market continued to “normalise” but hastened to highlight how “net sales declined on an unfavourable comparison basis, also reflecting inventory adjustments, in particular at retailer level”.

The group saw share gains with Jameson, Código, Malibu, Kahlua and The Glenlivet and is planning “strong activation plans ahead of festive season” and a “positive outlook for the full year”.

The group anticipates a “good price/mix for Seagram’s whiskies with continued strategic focus on the higher end of the range” and pledges its “continued strong development of ‘strategic international brands’.

In the global travel retail stable, Ricard pointed out that passenger traffic stood at circa 90% vs. pre Covid, with the obvious differentiator being that travel has returned and airports have re-opened.

Ricard also described how there was “gradual recovery in Asia” but admitted that sales were “impacted by shipment phasing and high comparison basis in Europe” and yet “strong growth is expected for the full year”.

For sales in Europe, growth was mainly driven by Germany, France and Poland and France’s growth was “driven by strong performance of Ricard notably in the on-trade, enhanced by summer activations”.

In terms of the group’s outlook, Ricard reiterated that he remains “confident” and is certain it will adapt to “easing inflationary pressures”.

Ricard concluded: “As expected we experienced a soft start to the year, yet I am encouraged we have largely offset declines in US and China this quarter, thanks to our good performance in other markets. Our strategy over many years has been to build a diversified portfolio and broad geographic footprint across mature and emerging markets. This strategy provides us with the resilience to weather challenging times enabling a consistently solid performance. In the months to come I look forward to sharing with you exciting brand activations and innovations across our full portfolio. I am confident that we can deliver broad-based and diversified organic sales growth in FY24.”