Pernod Ricard Targets Premium over Prestige in China Market as ‘New normal’

Published Date : Sep 03, 2015

In China, the international spirits category has begun a ‘new normal’, as stated by Pernod Ricard, with low priced offerings expected to drive growth in future.

Since the anti-extravagance legislation came into effect in the country in q2012, international spirits companies such as Pernod witnessed plunging sales. 

Subsequently, the drop in demand for high end spirits affected Pernod with 23% drop in sales in China in the financial year 2014.

However, last week, the group reported slowing declining in China, with sales dropping by 2%.

The MD of Pernod Ricard, Gilles Bogaewrty spoke to media in London stating performance to be ‘good’, while also throwing light on the company’s strategy in the next few years.

He further added that the company is happy with its performance in China for 2014-15, as the business is almost steady. He also stated that if the company delivers similar results in 2015-16, it would be good performance.

The company has been gearing up for a new normal in China in the last couple of years, which is towards seizing new growth avenues, especially products in the premium and super premium price range rather than focusing on prestige and above price range products. 

The company executive further added that brands such as Ballantine’s Finest, Absolut, Jameson, and Martell Noblige clearly indicate new growth prospects. 

When the executive was asked about the government’s plan in China to devalue RMB, he stated that in recent years the devaluation has been modest from 45 to 5%. 

Earlier last year, the value of RMB increased by 11% against the Euro, so the current value of RMB is stronger than Euro than last year. In the last few weeks, BRL, RUB, INR, and RUB have suffered dropping in value due to Chinese tension.