Pernod Ricard Chairman & CEO Alexandre Ricard has underlined the importance of the company’s travel retail business, which returned to growth in the first half after what he termed “a difficult year” in 2015-16.
As reported, Pernod Ricard sales grew by +4% year on year to €5,061 million in the six months to 31 December 2016, with the travel retail channel performing well.
Sales in Americas travel retail climbed by +14%; Alexandre Ricard explained some of the factors behind the improvement.
“Last year we had a difficult year driven by a number of geo-political, macro-economic factors, especially in the US where dollar appreciation made it difficult for Latin American travellers to afford US-denominated transactions,” he explained to The Moodie Davitt Report at Pernod Ricard’s half-year sales presentation in London.
“This year it is back to growth, driven by Travel Retail Americas. Within Travel Retail Americas we have a more favourable comparable due to the decline last year. There is also [the development of] Martell, which has been prioritised in Travel Retail Americas.”
Ricard added: “Travel retail is a big market for us and it’s back to growth.”
The CEO described the company’s travel retail performance in Asia as “more stable” year-on-year, while he attributed sales declines in Europe to political unrest caused by the military coup in Turkey and a weak Russian Rouble against the Euro in 2016.
“In Turkey, if you look at hotel occupancy rates they were down anywhere between 60-80%, so obviously, we suffered a little bit in the on-trade in Turkey. On the other hand, the off-trade is growing quite nicely.”
Despite recent surveys indicating travellers have been less inclined to travel to the US after President Donald Trump’s decision to temporarily ban visitors from seven Muslim countries, Ricard did not show concern from a business perspective. However, he said the company is working with retail associations to lobby Trump’s proposed border tax, which if implemented would increase importing costs.
“I don’t think it’s fair to the American consumer,” he remarked, adding there are around 100 organisations disputing the move.
Innovation and a changing consumer
During the presentation Ricard and his executive team highlighted the ways Pernod Ricard plans to innovate in the 12 months ahead.
To cater for growing consumer interest in food & beverage provenance, the company will start putting QR codes or similar labelling on each of its bottles, enabling customers to scan items with their mobile devices to receive information about ingredients and the brands.
The organisation said it wanted to better connect directly with consumers, although Ricard acknowledged the importance of its partnerships with retail partners and their sophisticated supply chains.
“Having interactive exchanges with consumers is absolutely critical,” he explained, adding that direct relationship with consumers is “the way forward” to understand their likes and dislikes.
“You cannot rely on third parties to know your consumers,” he argued, saying he wanted to work with Pernod’s trade customers to develop the right market proposition for its brands.
Pernod Ricard’s latest direct-to-consumer concept, OPN, was showcased at the presentation by the Director General for the company’s Breakthrough Innovation Group, Alain Dufossé.
OPN is marketed as a “bottle in a box” or a “connected cocktail library”, aiming to help improve at-home cocktail-making experiences. Drinks can be ordered to home in cartridges, which are kept on a docking station synced to a mobile app.
The service, currently being trialled in around 200 homes in Paris, enables consumers to put together shopping lists, learn cocktail recipes, order spirits online and use digital platforms to access information about their home drinks supply. The video below shows how it works.
