Analysis - Pernod Ricard on track away from China glare
Pernod released its YTD results yesterday
China has dominated the reporting of financial results over the past year or so, particularly for premium spirits makers such as Pernod Ricard.
But in other emerging countries, and away from the corruption crackdowns that have hit China's Cognac and Scotch sales, Pernod appears in good health.
“We were encouraged by the diversity of Pernod's emerging market portfolio beyond China,” UBS analsyt Melissa Earlam said in a note today (25 April), a day after Pernod released its YTD results.
In Pernod's emerging markets unit excluding China - around 80 countries globally -organic sales grew by 9% in Q3 compared to 7% growth in H1. Meanwhile, Martell, badly hit in China, managed to increase from 9% organic sales growth in the first-half to +11% in YTD. This, Earlam said, highlights “the strength of Pernod's global distribution footprint”.
Nomura's Ian Shackleton said while that Pernod waits for China to turn around, outside of the country the “emerging market story remains robust”. He also expects China sales to be down to about 10% of Pernod's group sales by the end of this fiscal year as the company comes to rely less on the former growth driver.
Analyst agree, though, that there will be a return to some sort of normalisation in China next fiscal year. However, there is still no word on how “normal” that growth will be.
And with just-drinks' managing editor, Olly Wehring, last week maintaining there will be no going back to the good old days of rampant growth in luxury spirits in China, confirmation that there is plenty of life in other emerging markets will be a welcome boost for Pernod.
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