Analysis - Pernod Ricard finds Asian comfort away from China
Pernod is going through a transition in South Korea
Pernod Ricard's presentation on its Asia business yesterday was dominated by problems in China. But away from the Asian superpower's struggles, other countries on the continent showed more resilience.
Top-line growth in India continues to be robust and Pernod's Asia head Pierre Coppéré spoke of a “rally” in the country. Volumes, net sales and operating profits all outperformed local competition and Pernod held on to its leadership position in premium Indian whiskies such as Blender's Pride, Royal Stag and Imperial Blue.
India is “still very strong albeit at much lower price points and absolute profit than China”, analysts at Bernstein said in a note today (28 March).
South Korea, meanwhile, is going through a transition period, with double digit declines in whisky. In January, numbers coming out of the country showed that overall whisky sales were down 13% last year, the category's fifth annual drop in a row.
This decline, however, has been offset by double digit increases in so-called “modern spirits” such as vodka. In his presentation, Coppéré said Pernod's South Korean unit has just launched a shake-up to its business model, with more details to follow.
“I can't say much about it at this moment, but I can tell you it will be better aligned with growth opportunities in modern spirits,” Coppéré said.
Analysts Nomura described Pernod's outlook on Asia outside of China as “positive”, while highlighting a “resurgence” in Japan and improvement in Travel Retail after a weak H1.
That was backed by estimates from Pernod that showed full-year underlying operating profits growth for Asia excluding China is expected to be in the high single digits. China, in comparison, is expected to decline by low single digits for Pernod.
Which goes to prove, that despite problems in China, there is still cause for optimism within Asia.
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