Pernod Ricard's Europe sales decline
has reported a slight dip in sales for the first quarter of 2004.
The group's established brands performed well in the US and Asia
Pacific regions, but its European sales winessed a decline,
writes Danny Vincent.
The company said that its consolidated sales for the first quarter was €726 million compared to €740 million the same period of 2003. While the company's key brands and key markets witnessed strong growth in revenue and volume sales, the weak performance in Europe coupled with the appreciation of the Euro against the US dollar meant that total revenue declined.
In terms of volume sales, its key brands grew by 7.3 per cent in Q1 2004, and on constant structure and exchange rate basis, the company said its sales would have increased by 5.4 per cent.
The Asia Pacific region was by far the company's strongest area of growth. This sector contributed to the company posting a 12.9 per cent organic growth rate. The company said that this sector performed well in the first quarter as a result of the Chinese new year and the "sophisticated marketing" of some of its biggest brands. A company spokesman told beveragedaily.com that over the last two years it was the company's plan to repositioned its Chivas and Martell brands. The spokesman said that this move has now paid off.
The group claims the development of local brands in Thailand and India contributed to the results. "The Chinese sector has been becoming more important for Ricard Pernod as like many companies in the drinks sector", the spokesperson added.
In terms of organic growth, the US side of its business also performed well. It would have reported an 8.6 per cent sales increase if the affect of currency fluctuation was put aside. But currency fluctuations had a -5.4 per cent impact on the results.
South and Central America posted contrasting performances, the group said. This region posted an organic sales decrease of 0.6 per cent and the company said that this was influenced by the disappointing performance in Venezuela.
Its sales in France, once one of the company's core markets, improved slightly in comparison to the same period last year. It achieved an organic growth rate of 4.6 per cent. Its French sales are now "stabilizing". In the past the change in French drink driving laws and the implementation of higher tax in the past depressed the market, the group said.
Sales in Europe, excluding France, experienced "contrasting performances". The group said that a comparison between the first quarters in 2003 and this year was difficult to draw as 2003 was a strong year for the company, but overall in Europe its like for like sales decreased by 0.1 per cent. Its Scandinavian markets, Greece and Italy enjoyed good growth and the company said that the UK, Ireland and Spain grew modestly.
Pernod Ricard blamed the decrease on the weakened sales of vodka in Poland, duty increases in the Czech Republic and weakened German sales. It said that if these "one off factors" were not included its European sales would be growing at 3 per cent.
"Our European sales are performing well but not dynamically, the spokesman concluded".