just On Call: Pernod Ricard targets women as China crackdown intensifies
Pernod's fiscal full year ends on 30 June
Pernod Ricard is to target female consumers in China after increasing pressure from a government crackdown pushed down expected profits in the country.
In a presentation to analysts yesterday (27 March), Pernod's Asia president Pierre Coppéré said the company's fiscal full-year underlying operating profits in China will likely decline low-single digits. He blamed the drop on a decline in Western spirits being sold in China. Total Cognac volumes for the market are predicted to fall by 20% and whiskies by 9% over the 12 months to 30 June.
Last year, the Chinese Government implemented a campaign against conspicuous consumption among officials that has hit all spirits makers in the country, including Pernod, Diageo and Remy Cointreau.
Coppéré yesterday said that in year-to-date, Pernod's off-trade channel in China, which has been hardest hit by the anti-gifting measures, saw volumes drop by high single digits. However, over the same period, KTV channel volumes fell by double digit figures, a decline Coppéré blamed on a flow of new measures aimed at curbing prostitution.
The New York Times reported this month the anti-vice crackdown has seen bars and entertainment venues shut up shop, especially in China's southern provinces.
Coppéré said: “(The crackdown) has spread out across 30 cities. Some KTVs are being investigated by police and that has resulted in a disturbance in our business.”
Asked how long the pressures will last, Coppéré said it will “definitely” last under the end of the fiscal year with improvement unlikely to happen until fiscal 2015.
Coppéré said the launch of a Malibu range of RTD cocktails aimed at Chinese female consumers is part of Pernod's attempts to look at new channel opportunities. The cocktails will launch next week.
“It's big news for us,” Coppéré said. “It is a big innovation.”
Pernod's Asia business outside of China is faring better, with underlying operating profits expected to increase by low single digits, Coppéré said.
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