The hospitality and beverage alcohol markets are challenging, but Pernod Ricard has experienced growth.
Positive growth came in large part from what the drinks giant has deemed “must-win” markets: The United States of America, China and India.
Yesterday, Pernod Ricard revealed that their sales for H1 FY20 totaled €5,474m (nearly $6 billion USD), seeing organic growth of +2.7 percent and reported growth of +5.6 percent.
Brands Driving Growth
In 2018, Irish whiskey sales grew by nearly ten percent in the United States. Last year, they grew to $1.1 billion, growth of 5.6 percent. Jameson is the top-selling Irish whiskey in the US. In fact, the brand is number one in the world, enjoying a nearly 70 percent market share. That’s just one brand that helped Pernod Ricard see their recently reported growth.
Whiskeys of all types are in high demand, including Scotch. Of the seven growth-driving brands Pernod Ricard identified, three are Scotches: The Glenlivet, Ballantine’s and Royal Salute.
Two more spirits currently enjoying a boost in consumer demand are gin and Cognac. Pernod Ricard, of course, produces two major brands in both categories that drove growth: Beefeater and Martell. As reported by The Spirits Business in June of last year, Martell saw double-digit sales growth in 2019, increasing a stunning 16.4 percent.
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Coconut-flavored Caribbean Rum brand Malibu is the seventh growth driver Pernod Ricard identified in their sales report. Effective marketing and brand ambassador support is partially responsible for Malibu’s growth, which has been steady since at least 2017.
Effects of the Coronavirus
Earlier today, MarketWatch reported that the rampaging coronavirus has claimed 1,383 lives. Pernod Ricard has a heavy presence in China, their second-largest market. Reuters has reported that the drinks producer has 2,000 employees in China and closed their offices the first week of February.
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Bars, nightclubs and some restaurants—Burger King has reportedly closed half their stores in China—are closed due to the coronavirus outbreak and deaths. Pernod Ricard expects sales to dip this month but recover by April. The company warned that Q3 sales will be impacted the same day they revealed their H1 sales. However, Pernod Ricard has said they plan to stay the strategic course that has led to growth.
In the must-win designated US market, sales growth reached four percent. That positive growth comes from, in part, Pernod Ricard whiskies and specialty brands.
Overall growth can also be traced to Pernod Ricard’s Transform & Accelerate strategy. Two key elements of Transform & Accelerate are the company’s 2030 Sustainability & Responsibility plan, and the acquisition of new portfolio brands.
The first key certainly speaks to consumer desire for businesses to implement more sustainable, ethical and responsible business practices. But fulfilling on this consumer desire is more than virtual signaling: brands in this space have learned that sustainability and responsibility give them a future. If they don’t adopt more responsible practices regarding resources, there may not be a long term for which to plan.
Pernod Ricard has acquired Caste Brands (Arran, Clontarf, Gosling’s), Firestone & Robertson Distilling Co. (TX and the brand’s Whiskey Ranch), and Rabbit Hole. And today, Absolut Vodka announced their latest campaign: Drink Responsibly. #SexResponsibly. Absolut has partnered with RAINN to address consent and sex, making clear that “Only a yes to sex is a yes.
Citing a survey conducted by KRC Research on behalf of Absolut, the chairman and CEO of Pernod Ricard North America, Ann Mukherjee, says that nine out of ten people aged 21 to 30 have spoken about sex and consent with their family members and friends.
“Additionally, 61 percent said they believe companies should play a role in tackling this issue,” says Mukherjee. “When you pair that data with the startling reality that every 73 seconds, an American is sexually assaulted—frequently involving the perpetrator's misuse of alcohol—you can understand why we feel compelled to take a stand on the issue of consent.”
Some bars, restaurants and nightclubs have implemented the use of secret codes to help people out of dangerous situations on-premise. These are often cocktail-themed codenames, such as the Angel Shot, meant to communicate different needs to keep their guests safe: a walk to their vehicle, a ride home, or the police.