Pernod Ricard’s duty free business – long described by Chairman & CEO Alexandre Ricard as a “must-win” market – is set to hit pre-pandemic profit levels by the end of June as a carefully nurtured premiumisation and pricing strategy pays off.
That’s according to EVP Finance, IT & Operations Hélène de Tissot, speaking at a post-results call after the Chivas Regal to Martell French drinks powerhouse posted a +33% year-on-year rise in travel retail sales for the first nine months of financial year 2023 ended 31 March.
“We are on track for profit recovery to pre-COVID levels at [financial] year-end,” she said. “We’ve been increasing our prices at a high-single-digit level. Our net sales are currently at circa 80% of pre-COVID levels, and there is an overall recovery driving very strong premium Scotch development.”
Asked when the group expects net sales to match pre-pandemic results, de Tissot replied: “Our expectation for the weeks and months to come for travel retail are very positive, obviously because there was already a strong recovery happening in many geographies. Things are getting much better now in China.
“We are still obviously not back to pre-COVID. I think the estimates for the calendar year ’23 is probably that we could be globally back to maybe half of what Chinese travel used to be by the end of December. If it’s happening sooner, we’ll be quite happy to seize that opportunity.
“So the reason why we were already indicating that we should be back to pre-COVID level in terms of profit is that we don’t believe that the full recovery versus pre-COVID will happen as fast as by the end of June. But thanks to premiumisation and pricing, we’ll be back to pre-COVID level in terms of profit by the end of June.” ✈
