29 May, 2008 – Pernod Ricard says it will continue to focus on expanding its sales of premium products to ever more affluent consumers in emerging markets.
The drinks giant also said further acquisitions will be put on hold once its multi-billion dollar deal to take over Swedish outfit Vin & Spirit goes through so that it can reduce company debt. However, the trend towards consolidation in the drinks industry would continue, predicted its Managing Director Pierre Pringuet.
While established markets such as Europe and the US account for more than two thirds of its revenues, booming economies in China, India and particularly Russia were the three largest contributors in terms of sales expansion in MY 2007/08.
Pringuet said: "Markets like these have strong economic growth and an emerging middle class that wants access to affordable luxury."
The drinks giant estimates there may be as many as 13 million potential new customers in Russia, where there could also be a particular thirst for premium range products.
Russian sales per litre of alcohol have risen by 100% in the last five years, with the populace spending US$15 billion annually on vodka alone. Perhaps unsurprisingly, it is the world’s largest vodka market.
In March, Pernod Ricard announced it had reached an agreement to buy Swedish company Vin & Spirit for almost US$5.5 billion, whose most famous brand is the Absolut vodka range.
Pringuet said he expects the deal to be completed by the end of the summer after which Pernod may seek to add an extra brand to its portfolio at the top end of the market.
"It's too early to say, but there's certainly room for a super premium vodka in the Absolut range," Pringuet said.
Russian investment experts have said the country’s premium segment is set to experience fastest growth, more than doubling its current share to 6% in the medium term.
The Pernod Ricard chief added that with the acquisition of Absolut, the company was highly satisfied with its portfolio and had no immediate plans for further buy outs. Instead, it intended on concentrating on reducing the US$11.5 billion debt it has built up – partly through financing the Vin & Spirit deal.
"It's difficult to find any cause for disappointment in the portfolio,” he said.
“In the immediate future we're going to focus on paying down debt," he said, adding that the consolidation of the drinks market will continue.