Pernod raises a glass to Scotch as it leads giant's growth spurt

Published on 17/02/2011 14:43

Scotch whiskies ranked among the top-performers at Pernod Ricard which yesterday posted a 14 per cent rise in profits amid renewed speculation that it is in a tussle with Diageo to acquire some of the Fortune Brands portfolio.

The French group, which owns Chivas Brothers, said it benefited from strong growth in emerging markets and a "very favourable" foreign exchange effect during the six months to 31 December.

As a result of the improving outlook, the owner of Absolut vodka, Mumm champagne and Chivas Regal raised its full-year guidance on organic profit growth to "a level close to" 7 per cent, versus about 6 per cent previously.

Despite the upbeat news, shares in Pernod Ricard traded lower in Paris yesterday as investors digested significant increases in advertising spending by the group.

Pernod Ricard's so-called "Top 14" - its highest-value spirit and champagne brands - accounted for 59 per cent of first-half sales, which reached €4.28bn (3.6bn). Eight of these brands posted double-digit organic sales growth, including the Royal Salute (+31 per cent), Ballantine's (+13 per cent), Glenlivet (+12 per cent) and Chivas Regal (+11 per cent) whiskies made by Paisley-based Chivas Brothers.

Chivas, which ranks second to Diageo as the country's biggest whisky firm, employs some 1,400 in Scotland. Chief executive Christian Porta said the business's premium products had grown strongly in key emerging markets such as Brazil, China, India, Mexico and Russia.

Chivas Regal achieved double-digit growth in Asia, America, Africa and the Oceania region of the Pacific, but suffered a "marked decline" in Spain and Greece.

Pernod said continuing recovery in the United States helped Absolut post a 7 per cent rise in sales in the first half.

Pernod and Diageo have repeatedly been fingered in recent weeks as potential buyers as US-listed Fortune Brands prepares to split its sports, security and spirits businesses into separate operations. Family-owned distiller William Grant & Sons, which acquired Tullamore Dew in a 260m deal last year, has also been mentioned as a potential bidder for part of the business.

Chicago-based Fortune has said it intends to retain its drinks operation as an independently-listed firm, despite having reportedly hired advisers to examine the possibility of a sale. Its UK brands include the Teachers blend and the Laphroaig and Ardmore single malts.

• The European Parliament has voted in favour of a free trade agreement that will remove South Korea's 20 per cent import duty on Scotch whisky. The agreement will provisionally take effect from 1 July, and will see duties phased out over a three-year period.