Pernod Ricard is latest distiller to warn of slowdown in Asian growth
SCOTLAND’S second-largest distiller yesterday warned of a slowdown in sales growth in Asia as Scotch whisky faces “challenging” markets in China, South Korea and Thailand.
French drinks giant Pernod Ricard, which owns Paisley-based Chivas Brothers, blamed “less-favourable” economic conditions in the Far East and tough comparisons with last year for the easing off during the first quarter of its new financial year.
Sales growth in emerging markets slowed to 13 per cent in the three months to 30 September from 17 per cent at the end of its previous financial year.
Pernod – which makes whiskies including Ballantine’s, Chivas Regal and Glenlivet – also reported falling sales in western Europe, including a 5 per cent drop in recession-hit Spain.
News of the easing back in emerging markets comes just weeks after the Scotch Whisky Association (SWA) trade body warned that the eurozone debt crisis and a French tax hike had taken their toll on exports of Scotland’s national drink.
Larger rival Diageo – which owns the Bell’s, J&B and Johnnie Walker whisky labels – had previously cautioned over a slowdown in Asian growth.
But Pierre Pringuet, Pernod’s chief executive, highlighted that the group still grew its overall sales by 11 per cent to €2.2 billion (£1.8bn).
“In a less-favourable macro-economic environment we realised a good overall performance in the first quarter,” he said.
Pringuet predicted that profits will rise by 6 per cent over the course of this year, lower than the 9 per cent increase posted during 2011-12.
Espirito Santo analyst Martin Dolan suggested: “The comparisons are easier in the second-half of the year and we assume the company to have pitched guidance at this stage conservatively.”
Martin Deboo, an analyst at Investec, said: “We read the first-quarter as a miss to consensus that will compound market fears on a slowdown in Asia. France and Asia were below our expectations with cautious noises on China and Asia generally.”
But Phil Carroll, an analyst at Shore Capital, argued: “Overall, a robust performance from Pernod despite some adverse technical effects and some impact from slowdowns in some emerging markets. However, we still believe the business can deliver solid growth in 2012-13 and we continue to favour spirits over brewers.”
Brighter spots for whisky during the opening quarter included rising sales of Chivas Regal and the Glenlivet in India and an upturn in demand for Chivas and Passport in Brazil.
Eastern Europe also continued to sate its thirst for Scotch, with Ballantine’s and Chivas popular in Russia and Ukraine.
The Glenlivet led the charge in the United States, which was one of the highlights for the group, with Americans stocking up on spirits ahead of the “holiday season”, which includes Thanksgiving and Christmas.
Pernod said its Chivas brand had benefited from dedicated advertisements for its 18-year-old bottling, a partnership with luxury shoe designer Tim Little and the creation of a “magnum”-sized bottle for bars.
Ballantine’s was also promoted through its sponsorship of “T-shirtOS”, a digital T-shirt that can display its wearer’s Facebook status or their Twitter tweets.
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