The Chinese government’s decision to reduce official spending on extravagant products has severely impacted luxury spirits producers’ sales, with Pernod Ricard posting a 23% decline for the market in its 2013/14 financial results.
Depletions for Martell Cognac, whose high-end Cordon Bleu expression retails for CNY970 (€120) a bottle, declined 5%, while Pernod Ricard’s whisky arm, Chivas Brothers, saw Scotch depletions move -18%.
However the group has asserted its confidence in a renewed strategy to adjust its business model to target China’s increasing band of middle class consumers.
Pierre Pringuet, CEO of Pernod Ricard, said the outlook was already looking positive for stabilization in China.
He referred to a slowdown in the depletions decline for Chivas Regal in the last quarter of the year, which stood at -8% against the -16% recorded in the first nine months of the year.
“[The measures] were probably deeper and wider than we anticipated but we now anticipate a gradual – and there’s emphasis on the gradual – improvement of the situation in China.
“In the medium- to long-term we are extremely optimistic about the country because of its financial economic growth and increase of the middle class.”
Speaking at a press conference to mark the French drinks group’s 2013/14 financial results, Pringuet drew attention to a 24% net gain in depletions for the super-premium Martell Noblige, which retails for CNY365 (€45), versus the declines felt by the ultra-premium Cordon Bleu.
Read more at The Spirits Business.