Pernod Ricard SA shook up its management in a bid to improve its brand management and capitalise on an upswing in demand for Martell cognac and Chivas Regal Scotch whisky in China.
Christian Porta, chief executive officer for Europe and Latin America, will become managing director of global business development and all the brand heads will report to him, the company said Thursday.
Pernod also raised its forecast for full-year profit growth to 4% to 6%. The shares rose as much as 2.6% in early trading.
Management Shakeup
Alexandre Ricard is making his biggest management reorganisation since becoming CEO three years ago, promoting the company’s longest-serving executives to take a more holistic focus on the overall portfolio rather than just running individual brands.
Chief Financial Officer Gilles Bogaert, who will take Porta’s former position, said there are very attractive new markets in Africa and Latin America that the company will target in the near-term.
CEO Alexandre Ricard has sought to modernize the company’s brand roster by acquiring fast-growing spirits including Smooth Ambler bourbon and Monkey 47 gin.
He’s also divested liquors that aren’t central to its business, such as the Domecq line of brandies, to focus on the surge in U.S. demand for cognac and Irish whiskey.
Profit Growth
Profit from recurring operations rose 5.7% on an organic basis to 1.5 billion euros ($1.8 billion) in the first half, which ran through December, meeting analysts’ estimates.
“The Scotch market is back in growth in China,” where the company could see double-digit revenue growth due to the later timing of the Lunar New Year, Bogaert said in an interview. Pernod Ricard’s investment behind brands such as Chivas Regal Scotch whisky in China as well as a partnership with the National Basketball Association has helped return the spirit category to growth, Bogaert said.
Martell cognac’s growth rate of 8% should continue through the second half of the year, Bogaert said. Brands such as Lillet are also performing “fantastically well.”
The “Asian engine is still firing,” wrote Alicia Forry, an analyst at Investec Securities.
Pernod Ricard is interested in more takeover opportunities this year, especially in the American whiskey segment, Bogaert said.
Jameson had organic sales growth of 12%, followed by a 10% increase in Martell, for which Pernod Ricard has a high-single-digit volume growth target this year. The Asian market is accelerating, especially in China and India.
'A Good Semester'
Commenting on the group's first half performance, Alexandre Ricard said, "H1 FY18 was a very good semester, with an acceleration vs. FY 17, in particular in China, India and Global Travel Retail. For full-year FY18, we will maintain our focus on digital, innovation and operational excellence (including pricing.) We expect sustained and diversified growth to continue across our regions and brands.
"We are therefore increasing our guidance for full-year FY18 organic growth in Profit from Recurring Operations to between +4% and +6%.”
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