Pernod Ricard cites marketing for sales bump

Pernod Ricard has credited its marketing strategy in helping deliver its biggest sales jump in four years.

Absolut Vodka

The second largest spirits maker in the world after Diageo says revenue rose 8 per cent to €8.2bn (£6.5bn) in the 12 months to 30 June, the fastest growth seen since the start of the financial crisis in 2008, the company says.

“Significant investment” in advertising and promotions for brands such as Chivas Regal, Glenlive, Jameson and Absolut Vodka was cited as a growth driver. The company says it spent €1.5bn (£1.18bn) on marketing over the last 12 months, with more than three quarters being invested in advertising of its premium brands. 

Marketing spend was concentrated on growing emerging markets, where investment grew 11 per cent. In Western Europe, marketing spend declined by 2 per cent.

At a press conference to announce the results, the newly appointed deputy chief executive and chief operating officer Alexandre Ricard, defended the decision to cut marketing spend in Western Europe, where sales dipped by 2%.

He added it optimised spend around promotions to encourage people to trade-up to its premium brands. “We are committed to investing in the growth of our brands in western Europe despite the slight drop in advertising and promotion,” he said.

Its “premiumisation” strategy, focusing efforts on marketing products that can demand higher prices, was also credited. Premium brands now account for 73% of the company’s total sales, up 2 per cent on the previous year.

In a statement Pierre Pringuet, chief executive of Pernod Ricard, said: “Throughout the 2011/12 financial year, the Group recognised its best growth rates since the 2008 crisis, be it for the top or bottom line. This is the result of a clear and constant strategy: substantial investments in our brands, innovation, premiumisation and geographic expansion.”

Net profit rose to €1.17.bn (£920m), from €1.08bn (£856m) euros a year earlier.

Ricard’s promotion comes ahead of replacing Pierre Pringuet as chief executive when he retires in January 2015.

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