just On Call - US craft vodka puts squeeze on Pernod Ricard's Absolut
Absolut saw global sales and volumes fall
Pernod Ricard has blamed the rise of craft spirits such as Tito's Handmade Vodka for a drop-off in US sales for its Absolut brand.
Speaking to journalists today after the release of full-year results, CEO Pierre Pringuet said the US craft spirits trend is “very vibrant”, with new vodka releases numbering as many as 900 a year. Pringuet said only a few brands, such as the “dynamic” Texas-based Tito's, find success but releases still take up shelf space and “rattle the market”.
Last month, Ivan Menezes, CEO of Pernod's rival Diageo, shrugged off the suggestion that vodka's rise in the US was at an end.
In today's results, Absolut's global sales fell by 1% and volumes by 4% because of weakness in the US, its biggest market.
Meanwhile, Pringuet also blamed a “buoyant” whisk(e)y category for Absolut's fall in the US. But the CEO praised the vodka's growth outside of the US, claiming that in Brazil it has helped “open the door” for Pernod's other brands. Absolut increased sales in Brazil by 16%, according to Pernod.
Looking ahead, Pringuet said he expects a “gradual, and I stress the word gradual” improvement in group sales growth for fiscal 2014/15 as China recovers pace.
He also updated journalists on the Allegro cost-cutting programme, which aims to save EUR150m annually within three years. The company has already announced it will merge the back offices of its Pernod and Ricard offices in France, and today it said its Europe, Middle East & Asia region will be reduced from 42 markets into ten “management entities”.
It also emerged that next February, when Alex Ricard is due to replace Pringuet as CEO, Ricard's current position as MD for market companies will be discontinued. The job of MD for brands, currently held by Thierry Billot, will also be permanently removed. A spokesperson told just-drinks that Billot will retire at the end of his term.
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