The world’s second biggest alcobev manufacturer, Pernod Ricard posted its results recently and they seemed more encouraging than expected. The Q1 FY21 marked and improvement versus the Q4 FY20. The results were encouraging thanks to partial on-trade reopening and continued brand resilience in off-trade as India continues to be a resilient market for the company.

The total sales for the first quarter of FY21 totaled €2,236 million, which included an organic decline of -6% due to off-trade channel remaining resilient in the USA and Europe. Although there was a partial on-trade reopening, the report suggests that the channel is still disrupted with Travel Retail showcasing significant decline.

Results in India

Closer to India, which is one of the key markets for the manufacturer, continues to be in a double-digit decline. The growth in India revenues from its India operations grew only 6% in the year ended March 2020 against 27% jump a year earlier. The company recorded gross sales of Rs 21,424 crore in India in the year-ended March. However it recorded a 24% jump in its net profit for the year at Rs 1,612 crore as it focused more on premium brands. This was more than double of its larger rival United Spirits’ profit of Rs 705 crore during the year. Currently, India accounts for 11% of the manufacturers global sales. The company that follows a July-June fiscal globally, said that the Indian business declined 11% in the year ended June 2020 with heavy impact due to the pandemic. Alexandre Ricard, Chairman, Pernod Ricard informed investors last month that the fact that the business fell only 11% in the FY20 ‘despite the very strict lockdown disrupting the fourth quarter’ showed India’s resilience as a market. “We consolidated our leadership position with our market share still above 45%, and in fact, still growing slightly,” he added.

Results by Geography

With the festive season in the offing the results were strong in markets like USA and China, with strong shipments auguring well for the company. There was good resilience in the markets of Europe as well thanks to Off-Trade and ‘staycation’ over the summer. There was also strong dynamism in the UK and Germany with France nearing stability. However the markets of Spain and Russia showed decline.

By category, Sales were driven by

International Brands declined by -10% with significant declines for Martell, Chivas and Ballantine’s, primarily due to the restrictions in Travel Retail. But Malibu and The Glenlivet displayed strong growth with Jameson showcasing resilience. Local Brands saw a decline of -6%, with decline of Seagram’s Indian whiskies. But there was double-digit growth of Kahlua, Passport, Ramazzotti and Wiser’s. Specialty Brands saw an increase of +30%, thanks in particular to Lillet, Malfy, Aberlour, Avion, Altos and Monkey 47. Wines registered a growth of +9%, driven by double-digit growth of Campo Viejo and Brancott Estate with Jacob’s Creek growing by +8%. The overall reported sales declined by -10% due to unfavourable FX impacts, mainly from US Dollar and emerging market currencies. The Q2 is expected to still be strongly impacted by Covid-19, but Sales to return to growth in H2. Alexandre Ricard added that for FY21, “we expect continued resilience of our business in an uncertain and disrupted environment. I would like to take this opportunity to praise our teams, whose engagement and performance are exemplary

in these very challenging times. We will continue to implement our strategy, in particular accelerating our digital transformation. We will tightly manage costs while maintaining the agility to reinvest to adjust to market opportunities.”