Pernod Ricard has been hard hit in China

Pernod Ricard has been hard hit in China

Pernod Ricard's Asia head has said the unit is on track in China after a better-than-expected Chinese New Year (CNY) saw Cognac volumes improve.

Speaking to analysts today, Pierre Coppéré said high-single digit sales growth is “still achievable” for the Asia unit in the medium-term, though he admitted it could take three to five years. He also said that while CNY trends were positive this year, is it too early to say if they are sustainable.

“We take positive trends as they come,” Coppéré said.

Pernod revealed today that in China, which accounts for around one-third of its sales in Asia, overall volumes increased by 7% during the CNY period compared to a 1% rise in the unit's financial year-to-date. Meanwhile, Martell Cognac volumes in China increased by 13% in CNY compared to a 5% rise in the eight months since that start of its fiscal year in July (YTD).

Net sales were not disclosed, but Coppéré said Cordon Bleu and XO sales were flat during the new year celebrations in China. 

Overall in Asia, CNY volumes were up on last year by 7%, and sales value up by 1%, compared to a 1% volumes increase and a 7% value drop in YTD.

Commenting on the results, CFA analyst Jason DeRise said they were “better than we and the market expected for Pernod”. He also said Pernod's confidence in future growth was good news for Remy Cointreau.

Pernod and Remy have been hard hit in China by an anti-extravagance government crackdown. However, Pernod has recently focussed fresh efforts on its Martell Noblige brand, a relatively lower-priced Cognac targeted at younger Asian consumers.

Today, Coppéré said that Noblige posted double-digit growth in China in YTD and enjoyed a 50% market share. The success sees the Noblige brand “slightly increase” its weight to about one-third of Pernod's Cognac portfolio, he added.

Scotch trends were less impressive, with Asia volumes down 11% in CNY and the unit's financial year-to-date. China Scotch whisky volumes dropped by 6% in CNY and 7% in YTD.