Pernod Ricard Beats Estimates As Lime Vodka, Irish Whiskies Soar
Pernod Ricard SA’s third-quarter revenue beat analyst estimates as demand for the distiller’s Absolut Lime vodka and Jameson Irish whiskey surged in the Americas.
Revenue rose 3% in the three months through March on an organic basis, the world’s second-largest liquor maker said Thursday. Sales growth in Europe and the Americas each surpassed the highest estimate of analysts surveyed by Bloomberg with 11 of 14 strategic brands showing sales increases.
“Jameson, Altos tequila, Martell cognac are all key drivers and that’s the key message - diversification of our sources of growth,” chief executive officer Alexandre Ricard said in a phone interview.
The distiller is targeting “fewer but bigger” product releases, Ricard said. The third-generation family executive to run the company has made innovation a cornerstone of his tenure as demand for the flagship Absolut vodka has waned in the US, its largest market.
The launch of Absolut Lime, which Ricard suggests using as a substitute for tequila in a margarita, has been “clearly successful,” he said. The company has also finished Martell blends in bourbon barrels and aged Jameson in casks washed with craft beer.
The shares rose as much as 2.3% in Paris. Pernod Ricard expects to report “good growth” in Europe and the Americas in the fourth quarter and sales performance in the nine months through March should continue, the CEO said.
“The stronger-than-expected print should provide further comfort that the business continues to improve,” Ed Mundy, an analyst at Jefferies, said in a note.
Sales in Pernod Ricard’s Asia and rest-of-world division missed estimates as regulatory headwinds mount in India, one of its largest markets.
The effects of demonetization are over, Ricard said, while cognac sales are recovering in China after a four-year government campaign against conspicuous consumption.
On Wednesday, rival Remy Cointreau said it was seeing a sharp acceleration in private consumption there.
Revenue in the quarter increased to €1.99 billion ($2.1 billion), beating the average estimate of €1.91 billion.
Pernod Ricard reiterated its forecast for organic profit growth of 2% to 4% this year The company will target bolt-on acquisitions over major M&A, Ricard said.