Pernod Ricard sales rise on strong demand for Irish Whisky in the US, Europe

French spirit maker Pernod Ricard on Thursday reported a 1% sales growth in Q1 2016/2017 fiscal year to €2.248bn, from €2.223bn recorded a year earlier.

The maker of Chivas Regal Scotch Whisky, Malibu rum, among others said that growth was driven by strong demand for its Jameson Irish Whisky in the United States. According to the American Distilled Spirits Council, Irish whiskey was the fastest-growing spirits category in the U.S. last year, climbing 16% or almost twice the pace of bourbon.

Sales in all of the Americas rose 3% though Brazil declined due to what the company described as a “difficult macroeconomic environment”. However, there was strong growth in the rest of Latin America, particularly Mexico, Argentina, Colombia, Uruguay and Cuba. Travel retail also returned to growth in the Americas.

Asia growth was led by 8% sales rise in India, albeit slightly lower than last year due to conjunctural regulatory challenges in some states (tax increases in Maharastra, prohibition in Bihar and distributor change in Punjab). However, there was ongoing premiumisation and innovation within India whisky range.

The company said that China remained a challenge for Scotch whisky and on Trade, though there were early signs of improvement driven by Martell Cordon Bleu and Off Trade.

Korea sales were less than satisfactory due to destocking of trade inventories; though, the company was putting a new structure in place that is expected to help lift sales.

Pernod Ricard noted that Travel retail in Asia region remained difficult due to tough commercial negotiations. However, Korea duty free was showing signs of improvement.

The company faced complex macroeconomic challenges in Africa and geopolitical tensions in the Middle East leading to revenue decline of 2% in the region.

Europe returned to 6% solid growth with Spain registering a 5% gain, driven by Seagram’s Gin. Germany had a good momentum, particularly on Absolut, Lillet and Remazzoti. The UK also had a strong start for the company’s Strategic International Brands, particularly Chivas, Absolut and Jameson. However, Travel Retail declined in Europe due to Eastern Europe.

Russia which is beset by macroeconomic headwinds showed good resilience with sales rising 7%.

On outlook, Pernod Ricard said it was sticking with its FY17 revenue guidance issued in September of organic growth in profit from recurring operations of between 2% and 4%.

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