CHINA: Pernod Ricard's sales hit by state crackdown
Pernod has admitted a "soft" performance in China blaming a state clampdown
During a conference call earlier today (21 March), Pierre Coppere, chairman & CEO of the group's Asia division admitted the clampdown on gifting to civil servants and ban on alcohol at luxury banquets, introduced late last year, was part of the reason for its “soft” performance in China in the calendar year so far.
Coppere said that “quite a lot” of banquets had been cancelled around the Chinese New Year period last month.
“Definitely, this has impacted the high-end of the business and not only spirits, but all categories,” Coppere told the conference call.
Diageo suggested earlier this week that its sales had not been affected by the clampdown in China.
Analyst Ian Shackleton of Nomura said another reason for Pernod's slowdown in China could be “a step-back by the affluent in not wanting to appear too affluent”.
However, looking ahead, Coppere said today that he believes the group's mid- to long-term prospects in China will be unaffected by the gift-giving ban, as it only accounts for around 10% to 15% of sales in the country.
Shackleton added: “Although it will be a quiet season for gift-giving and banquets until the mid-autumn festival, we believe that underlying sales will start to rebuild from Q4.”
Shares in Pernod are today down 4.43% at EUR95.57.
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