Pernod Ricard is preparing for a potential listing in India, as the maker of Jameson whiskey, Absolut vodka and Martell cognac continues to grapple with falling alcohol sales in many of its key markets.
The French spirits group posted a 19% increase in sales in India in the first three months of its financial year, a rare bright spot that helped to offset further sales declines in China and the US. Organic sales fell by 0.9% to €2.2bn at a group level, less sharply than the 1.7% dip predicted by analysts.
India had benefitted from “strong demand and continuing premiumisation,” with strong double-digit growth across imported brands including Jameson, Absolut and Ballantine’s, Pernod Ricard said.
The potential IPO in India remained subject to board approval, Pernod Ricard cautioned, with management declining to give a timescale for the float when pressed by analysts.
In contrast to India, the US and China continue to prove challenging for Pernod Ricard, with organic sales declining by 10% and 25% respectively over the quarter.
In the US, declines were driven by inventory adjustments, a soft spirits market and cautious consumers, Pernod Ricard said, with management flagging a shift by consumers toward smaller formats to better manage stretched budgets.
“Consumers are adapting and adjusting their consumption,” said Mauve Croizat, executive vice president of finance & tech. “We see them going more because of affordability towards smaller formats.”
In China, underlying trends were not as bad as the print, Pernod Ricard insisted, pointing out depletions had returned to growth in the quarter, with declines instead driven by trade inventory adjustments.
Meanwhile, sales in Europe dipped by 6%, driven by steep declines in Germany and Poland. A warm summer had weighted on on-trade sales, Pernod Ricard admitted, although underlying trends were “improving” in the UK, Croizat insisted.
For the full year, Pernod Ricard expects broadly flat net sales on an organic basis, with management committed to “strongly defend” organic margins via cost control, and by “accelerating” efficiencies and digital transformation.
Analysts at Jeffries described the first quarter showing as “good enough”, pointing to a narrower gap to the market in the US and depletion growth in China as reasons for optimism.
Shares in Pernod Ricard climbed 3% in early morning trading today (15 October).
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