Premium brands prove worth for Pernod Ricard

03 September 2010

PARIS: Pernod Ricard's range of "premium and super-premium" spirits brands are out-performing cheaper alternatives, despite the challenging economic climate.

The drinks firm's advertising and promotional expenditure rose by 5% during the year to June on an organic basis, to €1.3bn ($1.7bn; £1.1bn), or 17.8% of sales.

According to Pernod Ricard, this figure marked a "return to the 2007/08 pre-crisis investment level".

More specifically, 75% of Pernod Richard's outlay was diverted to its 14 leading brands, where the ad-sales ratio came in at 24%.

The portfolio - which includes Absolut Vodka, Chivas, Havana Club, Malibu and Jameson - generated 2% volume gains and 4% value gains in the last year, contributing 55% of revenue.

"We stick to our policy to invest behind our premium brands, and they increased their share in our portfolio," Pierre Pringuet, Pernod's ceo, said.

"Our priorities for the 2010-11 financial year remain the development of our premium strategic brands, a continuing strong marketing investment level, and the reduction in group debt."

While the US is experiencing a "slow recovery" and European nations such as Spain and the UK have been challenging, Pringuet said Pernod's high-end ranges are actually delivering the best results.

"What we can see is the evolution of premium and super-premium is more positive than standard and value products," he argued.

Overall, Pernod's like-for-like sales fell 6% in France and 3% across the rest of Europe in the last 12 months, although the Americas were up 1% and Asia Pacific witnessed a surge of 14%.

"China is growing fast," Pringuet argued. "There is one country in Asia which is difficult, Thailand, and that's linked to the political situation."

Data sourced from Pernod Ricard/Bloomberg; additional content by Warc staff