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Pernod’s Sales Decline By 1% In Q1, As Chinese Clampdown Hits Bottom Line

October 24, 2013

Pernod Ricard endured a slight sales decline in the first quarter of its 2013/2014 fiscal year, as the Chinese government’s anti-extravagance measures dealt a harsh blow to the Paris-based drinks giant. Pernod’s sales fell by 1% to €2.013 billion ($2.776 billion) for the three months ending September 30, 2013.

The company’s sales in Asia/Rest of World—which account for 40% of its total business—dropped by 6%, largely due to a double-digits shipment decline in China, where the clampdown on the luxury goods trade has buffeted Martell and Chivas Regal. The two brands’ global sales fell by 12% and 9%, respectively.

Results were far more encouraging in Europe (accounting for 33% of Pernod’s global sales), where sales increased by 3%, with Havana Club and Absolut both enjoying marked growth.

Meanwhile, Pernod’s sales in the Americas (26% of global sales) were flat. In the U.S., the company’s modest growth in the off-premise was largely offset by on-premise softness. Jameson continues to achieve impressive gains—its global sales rose by 13%—and its price mix is improving in the U.S. amid the expansion of its upscale Black Barrel extension. However, flagship brand Absolut struggled in the U.S. in the first quarter.

Despite the difficult first quarter, Pernod envisions solid profit growth for fiscal 2013/2014. The company projects organic profit growth of 4%-5% for the year ending June 30, 2014.

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