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Pernod Ricard Sees First-Half U.S. Surge, Considers Cuervo

February 14, 2013

A strong performance in the U.S. market helped drive global 6% net sales growth to €4.9 billion ($6.5b) for Pernod Ricard in the six months through December, its fiscal first half. Pernod’s U.S. sales leapt 9% on an organic basis during the period, as Jameson (+24%), Malibu (+10%), Beefeater (+16%), The Glenlivet (+21%) and Perrier-Jouët (+17%) all contributed double-digit growth. Absolut recorded a 1% increase after raising prices in six states, and Pernod says it will soon launch Absolut’s upscale Elyx variant in the U.S. Elyx initially debuted in global travel retail in 2011 and has since made its way to other international markets like Australia.

While the success of Jameson and The Glenlivet continues the positive trends in the Irish whiskey and single malt Scotch categories, the recent rejuvenation of Beefeater in the U.S. is more of a surprise. Pernod said the brand’s U.S. progress was led by the higher-priced Beefeater 24 extension, “in the context of renewed category growth” for gin. According to Impact Databank, Beefeater slipped by about 13% in the U.S. from 2005-2011, while the U.S. gin market declined by around 3% over the same timeframe. Gin’s prominent place in the ongoing mixology movement now seems to be driving a turnaround however.

Globally, the ongoing expansion of Martell Cognac led Pernod’s 18% first-half sales increase in China. India matched that performance on the strength of local whiskies like Royal Stag and Imperial Blue, aided by “strong growth” for Chivas Regal, Absolut and The Glenlivet. Pernod’s Eastern Europe sales rose 12%, but Western Europe (especially France, where higher excise taxes on spirits took a toll) continued to struggle.

Pernod CEO Pierre Pringuet raised eyebrows in an interview with Dow Jones this morning when he suggested the group would entertain “all forms of discussions” with Jose Cuervo, as that brand prepares to depart rival Diageo’s global distribution portfolio this June. Still, speculation on a potential tie-up between Cuervo and Pernod could be tempered by the latter’s assertion late last year that it has “no strategic need” for agency brands, and the fact that family-owned Cuervo is still seen as reluctant to be acquired outright. Pringuet added in the interview that for the time being Pernod remains focused on debt reduction, and may still be two or three years out from any major deals.


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