Pernod Ricard restructures

Pernod Ricard revises profit fall

July 23, 2020
By Alana House

Pernod Ricard has announced it expects a 15% organic decline in profit from recurring operations in FY20, down from prior guidance of 20%.

Strong cost mitigation, resilience in the off-trade, especially in the US and Western Europe led to improvement in its decline.

In March, Pernod Ricard shared its assumptions regarding the COVID-19 pandemic, which included:

  • China: very limited business in February and March; slow recovery from April
  • Travel Retail: 80% business decline for the period from February to end June
  • Other markets: off-trade, representing c. ¾ of sales: c. 10% sales reduction from mid-March to end June; on-trade, representing c. ¼ of sales: no sales from mid-March to end June, as outlets are shut or not reordering.

On balance, these assumptions have proven to be directionally correct, particularly in regard to China and travel retail. There have however been some notable differences, such as India being subject to a full six-week lockdown of all sales and production.

Pernod Ricard to ‘invest heavily’ in gin

Moving forward, Pernod Ricard plans to expand its portfolio of gin brands, which includes new additions Malfy and Ki No Bi, along with Beefeater, Plymouth and Monkey 47.

Malfy Gin

Louise Ryan, managing director of Pernod Ricard’s The Gin Hub, told The Spirits Business last month that the gin category has been “remarkably resilient” during COVID-19 pandemic.

“If you look at the US it’s been among the top three fastest-growing in the off-trade since COVID emerged,” she said.

“A new normal will emerge and gin will be very much a part of that. What’s driven gin is the fact that it’s gender-neutral.”

As for new acquisitions, she said: “In terms of M&A, we’ll evaluate opportunities as and when they rise. We’ve got a bit of work to do to unlock the next phase of growth on Malfy, Ki No Bi and Monkey 47.”

Pernod Ricard expands its mezcal portfolio

The drinks giant also announced it is collaborating with super premium brand Ojo de Tigre as it expands its presence in the growing mezcal market.

Ojo de Tigre

The drinks group entered the category in 2017 with a majority stake in Del Maguey Single Village Mezcal. 

Alexandre Ricard, Chairman & Chief Executive Officer of Pernod Ricard, said: “Ojo de Tigre’s authentic origins, mindful production and inviting taste contribute to its strong appeal among consumers. We look forward to a successful collaboration toward the brand’s future development.” 

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