The China slowdown has been "conjunctural", according to Pernod Ricard

The China slowdown has been "conjunctural", according to Pernod Ricard

Pernod Ricard has reiterated its confidence in a rebound for the Chinese economy, despite slower growth for its spirits brands in the country in its latest fiscal year.

Last week, the wine and spirits company posted low single-digit rises in sales and profits in the 12 months to the end of June. The figures indicated a poorer performance in the second half of the year in China, where the economy has been slowing of late, and the Government introduced anti-austentatious measures late last year.

Speaking at a briefing in London earlier today (3 September), Pernod's deputy CEO & COO, Alex Ricard, conceded that China, which is one of the firm's major growth markets for Scotch whisky and Cognac, had proved troublesome in fiscal 2012-13, but added that the country is set to return to more marked growth within the next 12 months.

“Our performance in China is fully in line with what we expected,” Ricard said today. “As in 2003, there has been a leadership transition (in the country). Usually, that transition generates about a year of uncertainty.

“Also, the Chinese economy was maybe growing too fast a couple of years ago, at around 10% to 11% GDP growth per year. The authorities have had a clear goal to slow this to around 7% - 8% growth. That has also had an impact.”

Ricard also highlighted a stalling of “the global wealth” of Chinese consumers. “Again,” he added, “that was one of the aims of the Government". 

“This has been a conjunctural slowdown,” Ricard continued. “We are absolutely confident of a rebound of the Chinese economy, which we expect to take place in early-2014.”

Following the results announcement last week, Ian Shackleton, an analyst with Nomura, also posited that China is set to return to nearer its recent growth rates next year. “At the very best,” he said, "it appears that China in FY2014 will be the mirror image of FY2013 (for Pernod), with a weak H1 followed by a strong H2.”

Pernod will release its Q1 sales results later next month.