Pernod Ricard reported an 8% increase in organic sales for the first nine months of fiscal year 2023, reaching $10.5 billion, according to its Q3 earnings report today. However, in the last quarter organic sales were down 2% ($2.6 billion).
Despite the decline in Q3, the French spirits company forecasts “very strong sales” in the fourth quarter.
“Our full-year guidance for FY23 is for organic growth in profit from recurring operations of circa 10%, with some operating margin expansion,” said Pernod Ricard’s chairman and CEO Alexandre Ricard in a statement.
U.S. sales dipped -1% in the nine-month period, impacted by high year-ago comparables. Latin America drove organic growth in the Americas, while China saw a bigger drop of -5% due to a “soft” festive season impacting sales of Martell Cognac in January and February. In May, the group cautioned to expect “portfolio-wide” price increases in China.
Elsewhere organic sales were positive despite political challenges in certain markets: the travel retail sector increased 33% due to the gradual resumption of China travel, India sales were up 15% and Europe’s sales rose 6%. The firm was among many companies that stopped exports to Russia after its invasion of Ukraine, but faced backlash last week in Sweden after reinstating exports of Absolut. Pernod Ricard reversed its decision, but has resumed exporting Beefeater and Jameson to Russia under some criticism from consumers. The company also faces regulatory challenges in India, where it waits on a liquor sale license in New Delhi.
Six categories drove 90% of the company’s growth including Scotch Whisky, Indian Whisky, Irish Whiskey, vodka, gin and no/low spirits. Growth for strategic international brands was driven by the Scotch portfolio, Jameson and Absolut vodka. Seagram’s Indian whiskies, Seagram’s gin, and coffee liqueur Kahlúa contributed to 11% growth of strategic local brands. Of the specialty brands segment, Lillet apéritif, Aberlour whisky, Altos Tequila, Malfy gin and Redbreast Irish whiskey helped drive 10% growth.
The group highlighted three recent additions as complements to its current portfolio. Aiming to reinforce its footprint in the U.S., the company acquired a majority stake in peanut butter flavored whiskey Skrewball last month. The deal was in line with the company’s strategy to bolster its portfolio with premium, non-traditional challenger whiskey brands. It also purchased George Strait’s Codigo 1530 Tequila in October 2022, broadening its agave portfolio across price bands. Around the same time, the company upped its stake in Sovereign Brands, producer of premium Caribbean rum brand Bumbu.