Pernod Ricard’s robust financial numbers, with strength from Asia to America, are a further strong indication that the headwinds to the premium spirits industry are easing.
They follow a similarly strong performance from arch-rival Diageo earlier this summer. The main drivers for the sector look to be less volatility in Asian emerging markets, and positive trading in the Americas, particularly the US, where blue-chip spirits businesses earn a significant slice of revenues and earnings.
The importance of the Americas to Pernod’s bottom line continues to grow: the region increased its operating profits year-on-year by just under 12 per cent.
If the US, in particular, is doing OK, premium spirits normally have their tails up. The likes of Pernod Ricard and its peers have piggybacked on the more benign trading conditions, helped by ongoing efficiency programmes.
It is a virtuous circle. Efficiencies are shaken out of back office and the distribution chain, with the money put behind the glitzy marketing of key international brands (Jamesons whiskey a stellar turn for Pernod this time again).
The marketing brings in more drinkers, with the highly stylised nature of the advertising commercials reeling in an increasing younger demographic, which by its nature is positive for future prospects. Skol!
888 reasons to be concerned
The record £7.8 million fine for online gambling giant 888 over its “serious failings” in its handling of vulnerable customers is a public relations black eye.
The Gambling Commission found “significant flaws” in 888’s social responsibility processes, mant to protect consumers from gambling-related harm.
It found that due to a technical failure in the company’s systems, more than 7,000 customers who had chosen to self-exclude were still able to access their accounts.
Separately, more than £1m was wagered by one gambler – including £55,000 stolen from their employer. Looked at all together, this does not look like a case of minor lapses, but a systemic failure by 888 to ascertain many of its customers were not obeying the industry injunction of “stop when it stops being enjoyable”.
They were skating at and beyond the edge of financial self-harm.