Pernod Reveals Mixed Fiscal Results

Pernod Ricard reported what they called an “absolutely outstanding” 2007-2008 fiscal year despite the economy, although there is no doubt the U.S. remains and will continue to be a difficult market. The company said it experienced strong growth in emerging markets and continuing strong growth in western markets overall.

Managing director Pierre Pringuet and deputy managing director Emmanuel Babeau conducted most of the call, as ceo and chairman Patrick Ricard remarked: “I’m rehearsing for my future role so I will not be talking.” Pierre is slated to takeover as ceo soon and Patrick will remain chairman.

There were a lot of highlights for Pernod this year, including the acquisition of Vin & Sprit and Absolut. In addition, the company will assume worldwide distribution of Absolut beginning October 1 as a result of inking deals with Future Brands and Maxxium. V&S’s former joint-venture with Fortune Brands in the U.S., called Future Brands, was slated to last until 2012 but Pernod paid $230 million to exit early, and then sold Cruzan to Fortune for $100 million.

Additionally, Pernod will pay Maxxium shareholders $59 million euros to exit October 1. The 25% equity stake held by Vin & Sprit in Maxxium will be redeemed by Maxxium for 60.4 million euros on March 30, 2009.

BRANDS IN THE U.S. In the Americas, Chivas, Jameson and Malibu were the top three contributors to gross margin growth.

However, in the U.S. Chivas declined -6% in 12 month depletions and Nielsen volume, which was inline with the overall market. The 12-year blended Scotch market is down -5% in the U.S.

Jameson continues to do exceptionally well with yearly depletions up 24%, Nielsen volume growing 29% and NABCA (Control States) up 20%.

The Glenlivet also experienced a good fiscal year in the U.S., with 12 month depletions growing 6%, Nielsen +3% and NABCA +5%.

Due to strong price increases, Martell VS took a sharp reduction in volume, particularly in the US where Pernod is hoping to further premiumize the brand.

Malibu’s popularity held steady, with 12 month depletions up 5%, Nielsen growing 5% and NABCA increasing 7%.

As expected, Kahlua is still underperforming. Depletions declined -7%, while Nielsen was up 2% and NABCA declined -3%. Pierre said the new marketing platform, “Dare to be Curious,” seems to be working. He “hopes it’s a stepping stone to the brand’s development.”

Beefeater remains difficult in the U.S., with depletions down -3%, Nielsen -0.5% and NABCA -3%.

Montana wine experienced excellent growth in the U.S., where depletions grew 15% and Nielsen volumes increased 21%.

Stoli depletions grew 3%, while its Nielsen numbers were flat and NABCA was down -1%. With regards to the brand, Pierre said: “We will almost be sorry to see it leave the group, not to mention the pride we feel in helping to develop it…the time has come to turn the page and the next page we’ll be commenting on Absolut.”

“V&S has already been integrated and we expect Absolut to continue its trends…flat or growing slightly in the U.S.,” continued Pierre.

NO Q1 PRICE INCREASES. Pernod appeared slightly less optimistic about the 2009-2010 fiscal year. With regards to the economic environment, executives maintained it’s more difficult than it was a year ago but said developing markets are growing strongly, while other markets are seeing more moderate growth. North America is “very difficult.”

“I do read the headlines in the press which everyday brings its surprises and events…it may seem hazardous to talk about prospects or outlook. We, however, take a very cold eye on the reality of the situation and have deduced the consultations I’m about to comment,” said Pierre.

In the first quarter, low growth is expected in North America because of a continuing difficult environment and tighter credit terms (pressure from trade and wholesalers to reduce inventory). As a result, Pernod will not implement a price increase in the first quarter in the U.S.

FUTURE ACQUISITIONS. Pernod says it is not planning on acquiring any wine brands in the near future. When asked if Pernod plans to acquire any American vineyards, Pierre said “this is not the time for acquisitions for Pernod Ricard. Our priority is debt reduction.” He said Pernod makes one major acquisition every three years.

For now, the company will focus on its top 15 strategic brands and key local brand leaders. Other brands that are not in the limelight “don’t tend to succeed. And sometimes you need to know how to dispose of assets,” he said. Pierre’s comments lead us to believe that we may see some divestures in the near future.


We regret to report that Didier Dagueneau has died in a flying accident at the age of 52, reports Decanter. Known as one of the greatest Sauvignon Blanc producers in the world, Dagueneau was killed in a microlite accident in the Dordogne region of France. The microlite reportedly stalled after take-off, falling 50 meters before hitting the ground. One other person was seriously injured. He is survived by his partner Suzanne, and four children.


PALANDRI WINES of Australia will now be known as 3 Oceans Wine, after being purchased by Chinese entrepreneur Xibo Ma. He was previously the second biggest shareholder in Palandri. CEO David Wheeler said: “After a challenging time for Palandri I am delighted to be able to lead the business in a new direction where its potential can finally be realized.”

Until tomorrow, Megan

“It’s a funny thing about life; if you refuse to accept anything but the best, you very often get it.”
W. Somerset Maugham

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