By Dominique Vidalon
PARIS (Reuters) -Pernod Ricard on Thursday said it expected robust annual sales growth as the French spirits group plans more price hikes in China and the United States to offset high costs of energy, glass and packaging.
Pernod, which owns Martell cognac, Mumm champagne and Absolut vodka, posted forecast-beating first-half profit and sales, helped by price hikes in China and the United States. Its shares rose 1.9% in early trade.
Chairman and CEO Alexandre Ricard told Reuters demand was “soft” during the crucial Chinese New Year festivities in January due to COVID restrictions but that the group was confident over Chinese prospects as the country had now dropped its zero-COVID policy with restaurants and bars reopening.
Overall Pernod Ricard said it expected its global sales to grow this year but in a “normalising environment”.
During the COVID pandemic Pernod Ricard and its rivals benefited from people drinking more expensive types of alcohol at home. This was followed post-pandemic by so-called “revenge conviviality” in reopened bars and restaurants and as travel retail gradually recovered.
There have been, however, growing signs the spirits industry growth was stabilising, notably in the United States, as positive effects from the pandemic fizzle out.
Pernod, the world’s second-biggest spirits group behind Diageo, reported profit from current operations in the six months ended Dec. 31 at 2.423 billion euros ($2.6 billion), an organic rise of 12%, above analysts’ expectations for an 8.2% increase.
Sales at Pernod – whose rivals include Remy Cointreau – totalled 7.116 billion euros in the first half, representing an organic rise of 12%, compared with analysts’ expectations for a 9.7% increase.
Pernod Ricard’s fiscal year started on July 1.
The strong first-half reflected a 5% rise in sales in the United States, Pernod’s top market, with growth driven by strong price hikes across its portfolio and new increases planned for the second half.
In China, first-half sales grew 4%, reflecting a strong first quarter with solid demand for Martell cognac during the Mid-Autumn festival but a soft second quarter due to COVID-19 restrictions.
Sales grew 17% in India, following a mid-single-digit price hike, notably for Seagram’s whiskies and strong demand for Pernod’s international brands, notably Jameson, the Scotch portfolio and Absolut vodka.
($1 = 0.9342 euros)
(Reporting by Dominique Vidalon; Editing by Sudip Kar-Gupta, Sherry Jacob-Phillips and Emelia Sithole-Matarise)