Strong growth in US and China propels profits at Scotch whisky giant

DRINKS giant Pernod Ricard has declared it “rebounded very strongly” from the challenges of the coronavirus pandemic amid strong growth in the US and China – and forecast that the momentum will continue.

Paris-based Pernod, which owns the Dumbarton-based Chivas Brothers whisky operation, reported €2.42 billion of profits from recurring operations for the year ended June 30, up 18.3 per cent on an organic basis on the year before.

Chairman and chief executive Alexandre Ricard said the results exceeded its performance in 2019.

Profits grew as the company, which has a vast drinks portfolio ranging from Ballantine’s and Chivas Regal premium whisky to Jacob’s Creek wine and Mumm Champagne, saw organic sales growth of 9.7% to nearly €8.8bn.

Pernod highlighted growth of 14% to €2.6bn in the Americas, amid “excellent broad-based growth with the USA, Canada and South America offsetting decline in travel retail”.

And it flagged “very strong growth” of 11% to €3.6bn across the region classified as Asia-RoW (rest of world), driven by China, Korea and Turkey. India saw growth but was a lesser contributor.

Sales in the US and China grew to more than €2bn and €1bn respectively.

Meanwhile the company hailed a “dynamic rebound” in Europe. Growth in the UK, Germany and across eastern Europe offset declines in Spain, Ireland and in travel retail, Pernod said. Sales in Europe increased by 4% on an organic basis to €2.56bn.

The update was the first to be provided by the company since the US and UK came to an agreement in March which resulted in the five-year suspension of a 25 per cent import tariff on single malt Scotch whisky to America.

The tariff, which had been in place since October 2019, was blamed for whisky exports to the US falling by £340m to £729m in 2020, though figures for the first half of 2021 released by the Scotch Whisky Association (SWA) indicated signs of recovery.

Whisky exports to the US were 3.9% higher, at £323.4m, compared with the first half of 2020, but remained 33.65% lower than the first half of 2019.

Pernod reported that sales of Chivas Regal blended Scotch rose by 3%, selling 3.6 million nine-litre cases during the year. Sales of Ballantine’s edged up 1%, with 7.6 million cases sold, while The Glenlivet enjoyed sales growth of 19% (1.4 million cases).

Mr Ricard said: “The business rebounded very strongly during FY21 to exceed FY19 levels. We expect this good sales momentum to continue in FY22 with, in particular, a very dynamic Q1.

“I would like to take this opportunity to praise the exceptional commitment of our teams during this difficult time and express my support to those who have been or continue to be impacted by this pandemic.

“We will stay the strategic course, accelerating our digital transformation and our ambitious Sustainability & Responsibility roadmap. Thanks to our solid fundamentals, our teams and our brand portfolio, we are emerging from this crisis stronger.”

The new chief executive of Chivas Brothers, Jean-Etienne Gourgues, is due to provide an update on the company’s Scotch whisky operations to the media today. Mr Gourgues, who was previously managing director of Pernod Ricard China and before that president and chief executive of Pernod Ricard Japan, was appointed successor to Jean-Christophe Coutures earlier this summer.

Earlier this week, The Herald reported growing concern within the Scotch whisky industry over major shortages of glass and cardboard. Distillers fear the current disruption to the supply chain is hampering the industry’s efforts to recover from the pandemic.

John Laurie, managing director of The Glenturret distillery in Crieff, Perthshire, said: “The shortage of cardboard has meant we were delayed in receiving our gift cartons, shipping cases and cardboard dividers, ultimately causing us to miss dates booked with bottlers and delay our annual launch by three months.

“Brexit has also caused complexities with receiving goods into the UK.”

The GlenAllachie Distillery in Speyside said the lead time for cardboard is now up to six months.

The Herald Scotland

The Herald Scotland

The Herald is a Scottish broadsheet newspaper founded in 1783. The Herald is the longest running national newspaper in the world and is the eighth oldest daily paper in the world. The title was simplified from The Glasgow Herald in 1992