Pernod Ricard overcomes Scotch whisky slowdown

Chivas Regal's sales in China, long a driver of growth, have dipped as the ruling communist party cracks down on gifts. Picture: Getty Images
Chivas Regal's sales in China, long a driver of growth, have dipped as the ruling communist party cracks down on gifts. Picture: Getty Images
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A CHINESE clampdown on luxury gifts and a fall in demand in France and Spain have led to a slowdown in Scotch sales growth at Pernod Ricard.

The French spirits heavyweight, which owns Paisley-based Chivas Brothers, Scotland’s second-largest distiller, “experienced a challenging year” in China, where communist party officials are cracking down on “conspicuous consumption”.

Spain’s economic woes have hit consumer spending on spirits, while the French market is recovering from a rise in duty, which meant wholesalers stocked up last year.

In Asia, which accounts for 40 per cent of Pernod’s revenues, the group said that a decline in whisky sales in China, South Korea and Thailand had masked an “excellent” performance in the Middle East, “especially Chivas in Turkey”.

The Glenlivet, Pernod’s flagship single malt brand, also chalked up 22 per cent global sales growth, selling a record one million nine-litre cases.

Sales growth in the Americas was driven by “premium” brands, including Chivas Regal and the Glenlivet.

Laurent Lacassagne, Chivas Brothers’ chairman, said: “This year has seen solid growth of our business on a global basis, with a very strong performance by our leading single malt, the Glenlivet, which has contributed more growth to the single malt category than any other brand over the past five years.”

Chief executive Pierre Pringuet was upbeat on the outlook for the group, saying that it would look at takeover opportunities if they didn’t stretch the company’s credit rating.

“Medium-sized acquisitions are entirely feasible for us… in the hundreds of millions of euros, up to €1 billion (£860m),” Pringuet said.

His comments came as Pernod posted a 6 per cent rise in profits to £1.9bn, allowing the firm to hike its dividend by 4 per cent to €1.64.

Sales at Pernod – which also owns Absolut vodka, Martell cognac and Mumm Champagne – rose by 4 per cent to £7.3bn.

Pringuet said: “Despite a less-buoyant environment than that of last year, we achieved our guidance.

“Our global and balanced exposure to emerging and mature markets will allow us to seize all opportunities.”

Pernod’s woes in China echoed those reported last month by arch rival Diageo, Scotland’s largest distiller and the owner of brands including Bell’s, J&B and Johnnie Walker.

Diageo benefited from a surge in demand for Scotch in the United States, a market in which Pernod has also enjoyed success.

Pringuet said: “The US market remains very robust and there are some signs of stabilisation in Europe, There will no doubt be less dynamic growth from emerging markets this year.”

Martin Deboo, an analyst at Investec Securities, said: “Pernod’s faint praise of ‘solid and in line with guidance’ sums it up for us. We read the full-year 2013 as a little below expectations on the headline euro metrics and on the organic sales line.”

Analysts at Citigroup added: “We are less optimistic about the long-term prospects for China.”