IRELAND: Premium market birth in China bodes well for Pernod Ricard - CEO-designate
Pernod Ricard is looking at a recent change in the shape of the international spirits market in China as an opportunity for its lower-priced offerings, including Jameson.
The company has suffered in China since the introduction of anti-extravagance measures by the Government in late-2012. Sales of higher-end extensions of Chivas Regal Scotch whisky and Martell Cognac have been hit particularly hard by the legislation, which has also damaged Pernod's bottom line.
However, the measures have suggested an alternative route to growth in China for Pernod.
Speaking at the company's Capital Markets Day in Ireland today (4 June), CEO-designate Alex Ricard said he believes that Pernod's more affordable premium brands are well-placed to exploit the situation. “There is a big structural shift happening in China that started about a couple of years ago,” said Ricard. “China is becoming a normal emerging market.”
“The big difference between China and a typical emerging market was that our entry-level imported spirit was a 12-year-old (Scotch whisky), led by Chivas 12 and above, and a VSOP (Cognac) and above. Over the last two years, as the emerging middle class and urbanisation has accelerated, we're starting to see the birth of the premium segment, with the likes of Ballantine's and Absolut.”
Ricard highlighted the positive prospects of the Jameson Irish whisky brand. “There's a sweet-spot, then, for Jameson in China,” he said. “This will be the subject of discussion between Irish Distillers and Pernod Ricard China, who are getting ready to focus as well on the premium segment, which clearly didn't exist three or four years ago.”
The Jameson brand is heavily weighted towards the US, which accounts for around 45% of sales. Russia is the second-largest market for Jameson, with 11%, followed by South Africa with 6%.
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