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Absolut rebound paints rosy global picture for Pernod Ricard - Analyst

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A US turnaround for Absolut vodka is helping owner Pernod Ricard climb back to robust sales growth, an analyst has said.

Pernod has established Absolut as an authentic brand, Stirling said

Pernod has established Absolut as an authentic brand, Stirling said

Sales for Pernod's top brand by volume have dipped in the past two years partly because of falling demand for flavoured vodka. However, last week, Bernstein's Trevor Stirling said flavoured Absolut declines are now less of drag, and that Pernod has established the Swedish vodka's non-flavoured expression as an authentic brand with consumers.

"[Absolut] is still losing market share but its volume trends are now positive," Stirling said. "And this is contributing to the much improved trends in the US for Pernod Ricard, which is now growing significantly ahead of the industry." According to Stirling, Pernod had been growing 2-3 percentage points slower that the industry because of Absolut's share loss.

Stirling said that combined with improved trends in China and solid growth in India, Pernod's Absolut resurgence in the US should see it return to the 5-6% global sales growth of the pre-financial crisis period. He also said Irish whiskey brand Jameson, which accounts for one-fifth of Pernod's US business, "continues to be a very strong engine of growth". 

The vote of confidence in Absolut should please Pernod's management, who told just-drinks in March that a recent improvement in sales has come from a stronger focus on Absolut's original flavour expression. Pernod's comments followed just-drinks commentator Richard Woodard's argument that the brand's recent problems suggested a turnaround was some way off. A EUR404m (US$455m) writedown on the brand last August was sandwiched by sales declines in the US of 5% in both fiscal-2014 and fiscal-2015.

In May, a survey of US wholesalers predicted that volumes for Absolut would decline over the next six months.


Sectors: Spirits

Companies: Pernod Ricard

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