Pernod Ricard announced price increases in U. S. and China in 2023
2023.02.16 08:46
Pernod Ricard announced price increases in U. S. and China in 2023
By Ray Johnson
Budrigannews.com – Pernod Ricard said on Thursday that it would increase prices in China and the United States in the second half of the year to protect its profit margins from the high costs of freight, energy, and glass.
The owner of Martell cognac, Mumm champagne, and Absolut vodka expressed confidence in its prospects in the Chinese market as it reopens from COVID lockdowns and predicted robust annual sales growth.
The second-largest spirits company in the world, after Diageo (LON:) reported sales and profits in the first half that beat forecasts, helped along by price increases of around 10%. The company’s stock price increased by 5%.
During the Chinese New Year celebrations in January, Chairman and CEO Alexandre Ricard stated that demand was “soft” due to COVID restrictions. However, he also noted that China has since abandoned its zero-COVID policy and that restaurants and bars have reopened.
Ricard told analysts, when asked about price increases for the second half: In a highly inflationary environment, it is very important to protect our margins. I wouldn’t be surprised if we ended the year with a high single digit price impact.
Ricard Pernod (EPA:) declared that, in a “normalizing environment,” it anticipated that global sales would rise this year.
Pernod Ricard and its rivals made money when people drank more expensive alcohol at home during the COVID pandemic.
However, as the pandemic’s positive effects fade, there are becoming signs that the spirits industry is stabilizing, particularly in the United States.
For the six months ended December 31, Pernod reported profit from current operations of 2.42 billion euros ($2.6 billion), an organic increase of 12 percent that was higher than analysts’ expectations of 8.2%.
Sales at Pernod, which faces competition from Remy Cointreau, also increased by 12 percent to 7.12 billion euros, exceeding analyst expectations of 9.7 percent.
Pernod’s top market, the United States, saw a 5% increase in the first half, driven by substantial price increases across its portfolio.
As a result of strong demand for Martell cognac during the Mid-Autumn festival in the first quarter and COVID-19 restrictions in the second, first-half sales in China increased by 4%.
