FRANCE: Laurent-Perrier targets prices as FY profits climb
By just-drinks.com editorial team | 6 June 2008
Laurent-Perrier has posted a healthy lift in profits for its last financial year, and detailed a greater emphasis on price going forward.
The French Champagne house, which last month reported a 5.4% lift in sales for the year to the end of March, said today (6 June) that net profit for the same period increased by 14.7% on the corresponding period a year earlier, totalling EUR34.6m (US$53.9m). Operating profit followed suit, up 16.1% to EUR65.8m.
"The regular growth in income, year after year, illustrates the determination with which we are pursuing our value strategy," said company chairman Yves Dumont. "Encouraged by such good performance, which strengthens the solidity of our financial structure in the face of an increasingly volatile global environment, we will be intensifying investment to develop our brands and reinforce our international presence.
"By resolutely targeting the international world of fine living and refinement, we plan to control the development of Laurent-Perrier, keep our house independent and continue to improve our profitability."
The company has implemented a new price policy this year, which "relies more on selective and specialised distribution channels", Laurent-Perrier said. These changes have been introduced to help the company "reach a new stage", despite a forecast reduction in volumes in the short- and medium-term.
"In the future, the price/mix effect will be, more than ever, the main lever for the development of Laurent-Perrier."
The company is set to release its first-quarter sales results towards the end of July.
Sectors: Wine
Companies: Perrier
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It will be an interesting experiment. Laurent Perrier has decided to take its prices sharply upwards, to reposition itself solely as a luxury good, rather than sell based upon the champagne in the bottle.
They will lose most of their loyal customers who have followed them for years and insured their profitability, in the hope that there are enough ultra-rich folks who can be convinced that Laurent Perrier is the ne plus ultra of champagnes.
This is a very risky strategy, which could pay off handsomely, or could torpedo their profits in very short order. Meanwhile, all the vendors bought in substantial stocks at the old pricing, so they L-P is going sell just about zero bottles for some time to come.
I am sorry to see them succumb to the LVMH mentality. Time to look for some more honest, grower-produced champagnes to replace these wines. There are plenty available, IMHO.
KeithKW said at 10:42 pm, June 6, 2008
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