Pernod revels in Asian gains

Pernod Ricard’s progress in the Asian market has left it in a stronger overall position than Diageo, which has under-performed in the region, according to a leading industry analyst.

Johnny Forsyth, senior drinks analyst at Mintel International, told the drinks business that Diageo’s failure to maximise the potential of its premium portfolio in Asia has left it lagging behind Pernod moving into the second half of the financial year.

“I would say that Pernod Ricard looks in good shape because it has so far more actively infiltrated the key Asian market, something which should safeguard them from over-reliance on the struggling European market,” he said.

“Diageo’s portfolio of premium spirits means it has huge potential to do well in Asia but has so far under-performed in this market.”

Forsyth was giving his reaction to the recent set of H1 results announced by the world’s two biggest drinks companies. Both reported declines in both sales and profits for the half-year, with Pernod losing 3% in like-for-like sales on the same period of 2008 and net profits dropping 2%

Diageo saw net profits plummet 10%, while like-for-like sales fell 2%.

Both companies, however, predicted stronger second halves, pointing to vastly improved second quarter sales figures as markets started to emerge from recession.

Forsyth believes that as consumer confidence returns and people return to their favoured brands, the strength of both companies’ premium portfolios will leave them in a healthy position.

“While short-term some premium brands have inevitably struggled, strategically this is exactly where the major players want to be, and both Diageo and Pernod Ricard have an excellent portfolio of premium brands.

“These should help them drive growth in emerging economies such as China in particular.”

Alan Lodge, 22.02.2010