PERNOD Ricard, the French spirits giant that owns Chivas Brothers, said its flagship whisky brand was “still struggling” in China but a tie-in with US basketball league, the NBA, in the country, was key to reversing its decline.
A double digital decline in sales of Chivas Regal in China led to a global fall in volume of two per cent, with sales falling three per cent.
Speaking as the company announced
full-year sales topping €9 billion (£8.3bn), chairman and chief executive Alexandre Ricard said a new strategy was under way to recover sales of the brand in China.
In the market, which remains hotly contested among whisky producers targeting the growing middle class, Pernod Ricard saw sales return to growth for the first time since 2013, led by Martell Cognac.
This, said Mr Ricard, meant the company would now focus on pushing Chivas.
“Our Chinese team have worked with the brand company to leverage the NBA. US basketball is extremely influential in China,” he said. “From a financial point of view, let’s be clear, we deliberately cut investments over the last few years on Chivas to focus on two things: the whole Martell range, and it’s back to paying dividends, and investing in our future growth in China for our [entire] international strategic portfolio. We had to take that money from somewhere. We’re now back in investment mode in Chivas in China with a strong execution platform which started a few weeks ago.”
Many of the group’s Scotch brands feature in this core portfolio of “strategic international brands”, including Chivas Regal. The brand did perform strongly in Europe, adding four percent and in total, Chivas Regal saw growth in 52 countries but this was not enough to overcome the decline in China.
Its other leading whisky brand, Ballantine’s, grew volume by four per cent and organic sales by three per cent.
The group’s leading single malt, The Glenlivet, grew volume by one per cent and sales by two per cent.
Geographically, the UK market was up seven per cent, ahead of Western Europe as a whole, at two per cent. This was driven by Jameson Irish whiskey, Absolut vodka, Chivas and the group’s wine portfolio. This portfolio is feeling continuing pressure as
a result of the pound’s weakness, while Mr Ricard acknowledged retail prices were pushed up on spirits to counter this.
The year also saw the disposal of the Glenallachie distillery to a team led by former BenRiach owner Billy Walker.
In the US, Mr Ricard said growth was solid, but at a slowing rate. Sales grew five per cent overall, with the 15 per cent jump in Jameson helping it passed the three million case milestone.
Availability issues around Glenlivet
12-year-old led to the launch of a Founder’s Reserve offshoot, and Mr Ricard said it was a year of transition in the US. Sales were flat for the brand, with volume up two per cent.
As a group, Pernod Ricard sales climbed four per cent to €9bn with profit from recurring operations up five per cent to €2.4bn.
Its business in the Americas delivered sales growth of seven per cent, to €2.7bn with profit up 12 per cent to €790,000. In Asia, profits climbed two per cent to top €1bn and in Europe, sales of €2.8bn resulted in a profit of €604,000, up three per cent on 2016.
The group has set guidance for its current financial year at at between three per cent and five per cent organic growth in profit from recurring operations.
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