Scotland's second-biggest whisky producer gives out mixed signals amid pandemic

The owner of Chivas Regal and The Glenlivet Scotch whiskies expects sales will return to growth in the second half of its financial year, although disruptions from the pandemic will continue to have an impact on parts of the business.

French spirits giant Pernod Ricard has brands including Chivas Regal, The Glenlivet, Mumm champagne, Absolut vodka and Martell cognac. Picture: John Devlin

French spirits giant Pernod Ricard, whose other brands include Mumm champagne, Absolut vodka and Martell cognac, issued the forecast after its first-quarter sales picture improved, reflecting resilient consumption in Europe and the US amid the Covid crisis, and improving sales in China.

Alexandre Ricard, chairman and chief executive of Pernod, which ranks as the world’s second-biggest spirits group behind Diageo, said: “Our first quarter is encouraging. Sales were still in decline, but the business has recovered significantly versus [the previous quarter], thanks to the partial reopening of the on-trade and the strong resilience of our brands in the off-trade.

“For [the current financial year], we expect continued resilience of our business in an uncertain and disrupted environment.

“I would like to take this opportunity to praise our teams, whose engagement and performance are exemplary in these very challenging times.

“We will continue to implement our strategy, in particular accelerating our digital transformation. We will tightly manage costs while maintaining the agility to reinvest to adjust to market opportunities.”

The group’s strategic international brands saw a 10 per cent fall in sales in the first quarter, with “significant” declines for Martell, Chivas and Ballantine’s, due mostly to weakness in travel retail. However, there was but continued strong growth for Malibu and The Glenlivet.

Specialty brands notched up 30 per cent growth, thanks in particular to Lillet, Malfy, Aberlour, Avion, Altos and Monkey 47.

Last month, Scotland’s second-largest whisky producer said it expects “continued uncertainty and volatility” next year after taking a €1 billion (£890 million) hit over the past financial year. The group has been hit hard by the shutdown of bars and restaurants in most of its key markets due to the pandemic.

Profit from recurring operations fell 13.7 per cent on an organic basis to €2.26bn in the year to June 30, though this was a stronger outcome than the company’s July revised guidance for a 15 per cent decline. Over the period, global sales fell 9.5 per cent to some €8.45bn.

The firm took a €1bn impairment charge during the year due to Covid-19 and mostly related to Absolut vodka.

Key categories were impacted by the pandemic, the group noted, though its specialty brands category performed well.

The chairman told investors at the time: “For [financial year 2021], Pernod Ricard expects continued uncertainty and volatility, in particular relating to sanitary conditions and their impact on social gatherings, as well as challenging economic conditions.

“We anticipate a prolonged downturn in travel retail but resilience of the off-trade in the US and Europe and sequential improvement in China, India and the on-trade globally.

“We will stay the strategic course and accelerate our digital transformation while maintaining strict discipline, with clear, purpose-based investment decisions.

“Thanks to our solid fundamentals, our teams and our brand portfolio, I am confident that Pernod will emerge from this crisis stronger.”

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