Pernod Ricard praises 'strong' year-end results despite Covid-19 setbacks

Pernod Ricard executives struck an optimistic note while revealing the company's latest full-year results, despite setbacks due to the Covid-19 pandemic.

At a briefing on 2 September, representatives from the drinks conglomerate, its whisky arm Chivas Brothers and its Gin Hub gave figures for market share and sales volume changes over the 12 months to the end of June - which encompassed weeks of lockdown in many countries around the world, including the UK.

Within the Chivas Brothers portfolio, total organic sales were down by 11 per cent, due in part to the severe impact that Covid-19 has had on global travel retail. Its operations were hit hard by the pandemic, with only four out of 17 production lines operating and six out of 14 distilleries running at the height of the UK lockdown. 

However, its strategic international brands - including The Glenlivet, Royal Salute, Chivas and Ballantine's - gained market share in nine of the top 10 markets covered by Nielsen, with a particularly strong performance in North America, where share rose by 3 per cent. 

The Glenlivet was the strongest performer among its strategic international brands: after growth of 15 per cent in the first half of the year, it saw 2 per cent overall growth for the full year, with domestic market growth of 6 per cent.

Jean-Christoph Coutures, chairman and CEO of Chivas Brothers, said: "We had a busy H2. I believe the results speak for themselves and I think as a group we have shown strength and agility in those results."

Chivas has continued to invest in marketing efforts, with a new campaign for Ballantine's and a fashion collaboration for Chivas launching in the coming months. It is also preparing for a £2.5 million investment in The Glenlivet's Scottish brand home.

Pernod Ricard's Gin Hub, which was established three years ago to capitalise on growth in the category, held up despite challenges. It saw a 12 per cent sales increase for its brands in the first half of the year - an increase on the 9 per cent growth in the first half of 2018/19 - but logged an overall decline of 6 per cent for the full 2019/2020 year.

There was some mergers and acquisitions activity for the Gin Hub in the fiscal year: it acquired super-premium Italian gin brand Malfy, launched a new partnership with Japanese gin producer Ki No Bi, and acquired remaining shares in Monkey 47, which remains a top-ranked craft gin brand among bartenders internationally.

Among its established brands, Beefeater saw growth in more than 20 markets and was bolstered by the successful launch of its blood orange expression and its well-received 'Spirit of London' marketing campaign. Plymouth Gin saw double-digit growth in the UK, although sales for the full year were down by 9 per cent. 

Louise Ryan, managing director of the Gin Hub, said the hub's brands had shown resilience in the off-trade and e-commerce despite the drop-off in on-trade activity. 

"There are lots of reasons to be optimistic about our growth in this category when the situation improves," she said. "The key measure of success in gin is market share; in 2019/2020 we gained share in 40-plus markets around the world."

In relation to the UK market, David Haworth, managing director of Pernod Ricard UK, said the company had achieved a record market share in the off-trade over the full year - up from 5.7 per cent to 6.5 per cent - while on-trade market share increased from 9 per cent in 2018/19 to 9.6 per cent.

In the 12 weeks to the end of June, covering the UK's Covid-19 lockdown, the company's off-trade sales value increased by 53 per cent with 92 per cent growth in e-commerce sales - far ahead of the market average of 58 per cent. The Gin Hub brands led the charge in e-commerce, with sales value up by almost 200 per cent.

David said there were "clear growth opportinities" for Pernod Ricard in the premium wines and spirits markets going forward.

2 September 2020 - Bethany Whymark