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Pernod Ricard Seeks Summer Boost

By Meghan Sapp   |   Friday, 22 Jul 2011 03:55 PM

French wine and spirits magnate Pernod Ricard (PDRDY) seems to be expecting economic recovery in Europe to come sooner or later, and it’s banking on the sooner. If it’s later, that’s probably all right for them, too. The major brands under Pernod Ricard’s care are all about summer cocktails: Absolut Vodka, Ricard Pastis, Ballantine's, Chivas Regal, The Glenlivet Scotch whiskies, Jameson Irish whiskey, Havana Club rum, Beefeater gin, Kahlúa, and Malibu.

Pernod Ricard’s focus on Europe ties in directly with the season, as music festivals reach across the region and the continent enjoys the few days of sun many of these countries are likely to see all year. Advertising and marketing is expected to hit 18 percent to 19 percent of total sales this year, up from 17.8 percent last year.

Most of the company’s rivals are putting their focus on emerging markets rather than Pernod's European strategy. Despite a continued weakening of the euro and concerns about bailouts from Greece to Portugal, Pernod Ricard’s CEO expects Greece to remain on the radar. Even broke people like to drink branded spirits.

In the U.K., the company’s attempt to stay ahead in the wine market seems to have backfired. The poor economy there has forced suppliers to heavily discount their wine offerings to keep people buying. Sales volume for wines in the U.K. market dropped by nearly a fifth during the past year as prices rose in comparison to others, such as Diageo (DEO), which dropped its prices to stay competitive.

Steady sales

Instead, Pernod Ricard will focus on its wine being the premium brand in grocery stores rather than in the sale barrel. It recently signed a joint venture with tequila brand Avion, which is likely to help strengthen the company’s premium image as it expands its spirits range.

Sales during the first three quarters of Pernod’s fiscal year saw were up, dominated by 16 percent rise in emerging markets, followed by 2 percent in mature markets, the company reported in May.

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French wine and spirits magnate Pernod Ricard (PDRDY) seems to be expecting economic recovery in Europe to come sooner or later, and it s banking on the sooner. If it s later, that s probably all right for them, too. The major brands under Pernod Ricard s care are all about...
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2011-55-22
 

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