Scotland’s second largest whisky producer to toast US tariff progress

Spirits giant Pernod Ricard, Scotland's second largest whisky producer and behind the Chivas Regal brand, will update investors on the boost it expects from the suspension of US tariffs when it reports sparkling full-year figures this week.

Chivas Regal owner Pernod Ricard will see a boost from the suspension of US tariffs on Scotch whisky imports.

The French group, also owner of The Glenlivet which is one of the biggest sellers in the US market, is likely to be a major beneficiary of the suspension of Scotch whisky tariffs.

Bosses have already guided investors towards double-digit organic profit growth for the latest full year as lockdown measures continued to be eased in key markets, and the partial recovery in the hospitality sector is likely to have seen continued strong sales growth in the current period.

The group posted sales of just over €1.9 billion (£1.6bn) in its third quarter, up 19.1 per cent on the year before on an organic basis and ahead of forecasts. That marked an acceleration on the first-half performance, leading to sales for the first nine months of the financial year of €6.9bn, up by 1.7 per cent on an organic basis.

At the time it said it expected sales to pick up further in the fourth quarter thanks to the gradual reopening of the hospitality sectors in key markets, though it warned its travel-based sales would remain subdued due to restrictions.

Pernod Ricard, which also owns Mumm champagne, Absolut vodka and Martell cognac, has also recently been boosted by a US court ruling over a separate issue on the tax treatment on exports which is expected to see it book an additional sum of around €140 million in income before tax in its 2021 earnings. The windfall represents about 1 per cent of organic growth.

In February, Chivas Brothers chairman and chief executive Jean-Christophe Coutures had stressed the importance of the removal of tariffs on single malt Scotch exports to the US to the continued recovery of the whisky industry. He also called on the UK government to prioritise the interests of Scotch in future free trade agreement negotiations.

Last month, Johnnie Walker and Haig Club owner Diageo hailed the suspension of the tariffs as it reported strong annual sales.

Ewan Andrew, the firm’s president of global supply chain and procurement, reported double-digit growth in Scotch sales and said he was "super pleased" to see the US tariff dispute move towards a resolution.

Group-wide net sales rose 8.3 per cent in the year to the end of June after factoring in the adverse impact of foreign exchange movements.

North America was a standout performer for Diageo with organic growth of 20.2 per cent helped by "resilient consumer demand" and the replenishment of stock levels by distributors and retailers.

The latest results showed that reported operating profit was up 74.6 per cent. Organic operating profit growth came in at 17.7 per cent, following a decline the year before, with growth reported in all regions except Europe and Turkey.

The firm said UK spirit sales grew 16 per cent as shoppers bought more whisky, Baileys, vodka and gin, with boosts from new product lines such as Gordon's Sicilian Lemon and Captain Morgan Tiki rum.

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