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Pernod Ricard Posts 5% U.S. Growth, But Warns That Market’s Momentum Is Slowing

August 31, 2017

Pernod Ricard enjoyed a 5% organic sales increase in the U.S. market in its fiscal year ended in June, but the drinks giant cautioned that the spirits category’s pace, while still solid, has slowed a bit in recent months. Across its global business, Pernod posted a 4% organic sales increase to €9 billion ($10.7b) for the year, while operating profit rose 3.3% to €2.4 billion ($2.8b).

Pernod’s U.S. progress was driven by Jameson (+15% in Nielsen channels in the 12 months through July 15), which crossed 3 million cases during the fiscal year and continues to see double-digit advances. Malibu (+3%) is also on the rise and outperforming the overall rum category. Martell Cognac (+25%) and Altos Tequila (+19%) have also been U.S. growth drivers for Pernod of late, while The Glenlivet eked out a 2% bump in the rising single malt segment.

Far more challenging are conditions in the vodka category, where Pernod says the overall market is worsening. Its Absolut brand continues to struggle, sliding 5% in Nielsen channels and 3% in control states over the 12 months through June. Absolut fell 3.4% to 3.9 million cases in the U.S. in calendar 2016, according to Impact Databank. Still, the brand’s recent launch of a new Lime flavor has been successful, Pernod said. While Absolut continues to face an uphill battle, Pernod has been augmenting its U.S. portfolio with craft additions like Smooth Ambler whiskies and Del Maguey mezcal, in which it has acquired majority stakes in recent months.

While Pernod saw a solid performance in the U.S. over the past year, it warned that the overall value growth of the U.S. spirits market registered at just 3% in the 12 months through July 15 in Nielsen channels, compared with a nearly 6% boost a year earlier. Premiumization, however, is ongoing the company says, with mix improvement driving gains. —Daniel Marsteller

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