FRANCE: Asia and Chivas help Pernod battle FOREX

By | 3 February 2005

French group Pernod Ricard today reported a 2.1% growth in sales of its wine & spirits business, despite being hit adversely by foreign exchange movements.

Its wine and spirits business realised sales (excluding duties and taxes) of € 3,490m for the year ended 31 December 2004, up 2.1% over 2003, reflecting a 5.8% sales organic growth rate that was partially offset by the adverse impact of forex movements and group perimeter changes amounting to €108m and €19m respectively.

The company said the results were achieved due to the excellent performance of its spirits brands, which posted a 6.7% sales organic growth rate, and in particular the performance of premium brands. A 3% increase in 12 key brands volume generated a corresponding 8% increase in sales on a constant exchange rates basis.
Sales growth was primarily driven by the Group's Asia/Rest of World and Americas operations.

Patrick Ricard, chairman and CEO said: "2004 was a great success for the Group marked by the excellent achievements of our Chivas Regal, Martell and Jameson premium brands, and by the confirmation of the potential of the Asian and American markets. In addition, we significantly increased our level of advertising and promotion expenditures, key to the future development of our premium brands."

He continued: "This very good performance which was confirmed in the 4th quarter enables us to confirm a Wine & Spirits organic growth target of between 8 and 10% in operating profit".

Chivas Regal and Martell posted volume growth of 12% and 7% respectively. Chivas Regal reported increased sales for all regions, but did particularly well in Chinese Asia. Martell enjoyed rapid growth for its superior qualities and in particular for Cordon Bleu (+29%).

Meanwhile, Jameson was up 10%, The Glenlivet 9%, Amaro Ramazzotti 6% and Havana Club grew 7%. The latter, which just recently surpassed the 2m cases threshold, was strong in Germany (+32%).

But Jacob's Creek's progress was hindered by the deterioration of the Australian market in the 4th quarter.
There was steady growth in Europe (excluding France), with 3.5% wine and spirits organic sales growth

This region, which accounted for nearly 40% of Group Wine & Spirits sales, continued its steady growth, driven by the group's 12 strategic brands, which enjoyed 5% volume growth.

The United Kingdom, Germany, Greece and Russia all enjoyed strong growth. However, Ireland and Poland (for vodkas) were both difficult markets in 2004. But Pernod said that Eastern Europe overall saw a significant rise in the demand for international brands.

In the Americas the company saw wine and spirits organic sales growth of 8%, driven by a return to growth of Chivas Regal and Martell, and ongoing growth for Jameson, The Glenlivet, Wild Turkey, Seagram's Vodka and Jacob's Creek.

In Asia/Pacific, Pernod saw organis growth of 12.2% for its wines and spirits brands.
Growth in this region was driven by Chinese Asia and the Chivas Regal, Martell, Royal Salute and 100 Pipers brands.

But the company added: "The Japanese and Korean markets remained difficult, while India continued to grow due to local whisky brands. The Australian wine market, experienced a difficult end of year that adversely impacted on the region's growth in the 4th quarter."
France, however, continued to struggle with only a 0.4% organic sales growth, which reflected a drop in anis, Ricard (-3%) and Pastis 51 (-6%). This was offset by the group's whisky (Chivas Regal, Clan Campbell, Aberlour), rum (Havana Club) and vodka brands, which progressed better.

Sectors: Spirits, Wine

Companies: Pernod

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