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Global lockdowns saw the world drinking up

In SA booze was banned but elsewhere, enforced homestays led to consumption rocketing…

Amid all the wailing around a global economic outlook that threatens to cause one of the most rapid declines in standards of living since the fall of the Western Roman Empire, it is heartening to spot a drop of good news from none other than giant booze group Pernod Ricard.

While the beloved country reacted to the pandemic with alcohol bans, anecdotal reports from the rest of the world suggest that the lockdown led to the drinks trolley getting wheeled out earlier and earlier, particularly by those who had months of furlough to enjoy.

This may well prove to be good news for liver specialists and the likes of Pernod Ricard, which reported a record year as it passed annual sales of $10bn for the first time, racking up its fastest growth rate in 30 years and reporting profits from continuing operations of more than $3bn.

The company grew across the board, with excellent results across all regions, price points and sales channels, while there was evidence of topers trading up to enjoy premium and super-premium brands.

Pernod Ricard owns 17 of the top 100 global spirits brands, but its line-up is pretty tame compared with its history. The Ricard side of the company was firmly steeped in pastis, but Pernod kicked off as a distiller of absinthe, the allegedly psychoactive rocket fuel associated with 19th-century artists and a state of absolute dissolution.

Absinthe was banned in France in 1914, Pernod moved into making its celebrated pastis, and the companies merged in 1975. Judicious acquisitions over the years have given the company a powerful stable of brands.


Another view: Pernod Ricard hails ‘symbolic milestone’ as sales pass €10-billion

The premium drinks company has announced record annual sales, yet Pernod Ricard remains unable to close the gap between itself and Diageo.

Record annual sales and profits up by a fifth, share gains in key markets and the company’s highest ever free cash flow. Add to this the dividend to be increased by 32% and a new share buyback programme worth up to €750m to further boost investor returns, and it’s quite the success story.

Any chief executive would be proud to make such an announcement, and indeed Alexandre Ricard, Pernod Ricard’s chairman and chief executive, was delighted, calling the financial year to the end of June a “symbolic milestone” in which the French group’s sales topped €10-billion.

Yet despite all the positives, his share price fell, albeit marginally. Many would have expected it to rise, especially as he oozed confidence about the new financial year which began in July, which Ricard said had started well.

It’s not that the financial markets were party poopers, but there were three factors at play.

First, Ricard had revealed in early June that he expected to announce bumper results in early September, so he had discounted his own news.

Second, global stock markets are on the slide as political uncertainties mount and inflationary pressures soar. Even resilient sectors such as premium drinks are finding it difficult to attract investors.

Third, his competitors in the global drinks sector have been reporting similarly impressive numbers, so despite the undoubted achievements, Pernod Ricard’s had an air of “me too” about them.

Profits from recurring operations rose by 19% to €3.024-billion, slightly above analysts’ forecasts of an 18.1% rise, arrived at after Ricard’s presentation in June.

The €10-billion sales represented an organic rise of 17%, increasing by 8% in the key US market, 5% in China and 26% in India.

About 6% of the growth came from price rises, including two rounds of increases in the United States in response to spiralling costs.

Two brand milestones were achieved with Absolut vodka topping 12-million cases sold and Jameson Irish whiskey going beyond the 10-million case mark.

Ricard said the French group had gained market share in most markets and had increased its prices by an average mid-single digits, which was helping to offset cost inflation. Further price rises are coming in the US and China this month.

Yet only a month ago, Diageo revealed organic net sales growth of up 21.4%, for the same 12 months, again with strong double-digit growth across all regions. Its organic operating profit grew by 26.3%, again with growth across all regions…..

TheDrinksBusiness: Read the full article