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Pernod Ricard Tempted By Hard Seltzer Market

French spirits group Pernod Ricard is monitoring the so-called hard seltzer market before deciding whether to jump on the accelerating bandwagon, the CEO of Pernod Ricard North America has said.

Hard seltzer - flavoured sparkling water infused with alcohol - is the fastest growing alcohol category in the United States, with sales in stores roughly doubling every year since 2016.

'Hard Seltzer Is On Fire'

"From an opportunity perspective in our portfolio, there is no doubt that hard seltzer is on fire," Ann Mukherjee told analysts during a call on the group's North American operations.

"I think it's partly because it's convenient, it's low-calorie. It could be really right for ready-to-drink cocktails and we continue to look at our brands - Malibu, Absolut - to see how it all plays out."

Pernod rival Diageo has already made its intentions clear, announcing on Monday that it has acquired Far West Spirits, parent company of Lone River Ranch Water, as it looks to expand in the hard seltzer category.

"This is one we are watching and if it continues to rise and allows spirits penetration to increase, this is a space we would definitely double down on," Mukherjee said of the hard seltzer market, though it was unclear whether the intention would be to acquire existing players or develop its products derived from its own brands.

Mukherjee also told analysts she was confident that trends seen during the COVID-19 crisis would continue once the pandemic is over.

Trends

Among those trends was growing demand from locked down consumers for cocktails and higher-priced spirits, which helped to boost first-half sales by 5% in its US market.

"COVID opened up consumers eyes to the fact they could enjoy really special drinks," she said, adding that she expects demand for premium products to continue rising for home use and away from home once the pandemic recedes.

In the United States, there are opportunities to further accelerate sales of Martell cognac while the company aims to stabilise sales of Absolut vodka in the short-term, she added.

Absolut vodka sales in the United States have been hit by competition from other brands as well as the closure of bars and restaurants during coronavirus lockdowns.

News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.

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