Absolut vodka - the brand responsible for a €404m write-down in Pernod Ricard’s annual financial results - has contributed to a strong performance by the business in the UK.
Pernod Ricard’s off-trade spirits sales rose 10% on volumes up 9% [Nielsen 52 w/e 20 June], with the biggest contributor to spirits growth a 15.4% hike in Absolut sales to £39.2m [IRI 52 w/e 18 July 2015].
Absolut’s success in the UK stands in contrast to its performance worldwide – global sales of the vodka were down 1% on flat volumes in the year to June, causing Pernod Ricard last week to book an impairment charge in its annual results, writing down the value of the brand by €404m. The business’s total worldwide net sales in the 12 months to June were up 8% to €8.6bn.
Chris Wisson, senior drinks analyst at Mintel, said the contrast in Absolut’s UK and global performance could be explained by consumer trends in the US that were unlikely to impact the UK market.
“Absolut would appear to be one of many mainstream vodkas which are losing share not only to craft or artisan producers (in particular Tito’s Handmade Vodka), but to flavour fatigue,” he said. “The rise of whiskey and rum has helped US consumers understand flavour can come from ageing rather than added flavour as many flavoured vodkas have done.
“The UK vodka market has been far more conservative with its flavoured innovation, a wise strategy that has helped the category retain its premium associations.”
Pernod Ricard also reported strong off-trade sales growth for its wines – up 8% in value on volumes up 10% [Nielsen]. This has been driven particularly by Campo Viejo, which has increased sales by just over a third to £75.6m [IRI]. The company’s Champagne brands Perrier-Jouët and G.H. Mumm, while relatively small, increased value sales by 70%.
Wines are far more important to Pernod Ricard’s UK business than they are globally. Worldwide, Absolut’s volumes alone are equal to those of its five priority wine brands combined. In the UK, however, its three largest brands are wine: Jacob’s Creek, Campo Viejo and Brancott Estate.