French distiller Pernod Ricard SA’s first-half sales rose more than expected as the Jameson Irish whiskey maker said US drinkers kept spending on spirits and China reopened.
(Bloomberg) — French distiller Pernod Ricard SA’s first-half sales rose more than expected as the Jameson Irish whiskey maker said US drinkers kept spending on spirits and China reopened.
Sales rose 12% on an organic basis to €7.1 billion ($7.6 billion) in the six months through December, the maker of Absolut vodka and Chivas Regal said Thursday. Analysts expected €6.9 billion.
Distillers have been raising prices to counter higher input costs even as they risk consumers downtrading to less premium brands. Fellow French spirits maker Remy Cointreau SA said in January that cognac consumption in the US normalized in its most recent quarter, while shipments to China surged.
The Pernod results suggest continued US demand for premium spirits despite high inflation and weakening economic growth. At the same time, distillers expect the key Chinese market to pick up as the country re-opens following the end of Covid-Zero policies.
“Our first half performance was very strong, marked by broad-based and diversified growth across all regions and categories,” Chairman and Chief Executive Officer Alexandre Ricard said in a statement.
Ricard said he expects “dynamic” growth to continue through 2023, though in a “normalizing environment.”
Recurring operating income rose to €2.42 billion, ahead of analysts’ estimates.
The company confirmed it would buy back about €750 million worth of its stock in 2023 with an imminent €300 million repurchase.
Pernod said Scotch Whisky accounted for about 22% of sales in the first half, with organic sales growth of 23% and price increases in the “low double digits.”
The company said in December it would invest $250 million over five years to build a new bourbon distillery in Kentucky.
Pernod has also been bulking up in tequila and other agave-based spirits as demand for Mexican liquors soars in the US.
Americans spent more money on tequila and mezcal last year than on domestic whiskeys. Sales are expected to top $13.3 billion next year, overtaking vodka as America’s most-purchased spirit, according to IWSR, which tracks and analyzes drinks market data.
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