By Scott Wright
THE chief executive of Chivas Brothers has declared Scotch whisky has demonstrated its “resilience” as its flagship brands recorded strong growth in the six months to December 31.
Dumbarton-based Chivas reported a 23 per cent hike in organic net sales for the first half, with Chivas Regal, Ballantine’s, Royal Salute and The Glenlivet all experiencing double-digit percentage growth.
The results came as Pernod Ricard, the distiller’s Paris-based owner, reported an organic sales rise of 12% to €7.1 billion for the period between July and December, ahead of forecasts.
The Chivas business reported growth of 24% in 22% in emerging and mature markets, and expansion across all regions. Its performance in Asia and Latin America was hailed as being “exceptional” and consistent with recent years. Korea, Japan, and Taiwan saw sales growth of 59%, 53% and 37% respectively, while Brazil, Colombia and Mexico saw increases of 40%, 30% and 21%. In Europe, sales rose by 17% in Spain and 7% in Poland. Sales in North America grew by 6%.
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Chivas noted that the Ballantine’s Prestige range had shown growth of 81% in the first half, driven by increased demand across Asia and in the global travel retail or duty free market. The Glenlivet – one of the world’s biggest selling single malt Scotch whiskies – was also boosted by its Prestige expression.
Jean-Etienne Gourgues, executive chairman of Chivas, said: “These positive results reflect the impact of our long-term portfolio elevation and premiumisation strategy.
“It’s a testament to the resilience of Scotch, its bright future, and our continued drive to open up the category to new audiences.”
The results were reported amid what Pernod chairman Alexandre Ricard termed a “normalising environment” across the industry.
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Whisky distillers such as Pernod and Diageo enjoyed a major boost to off-trade sales during periods of lockdown, as people spent more money on premium brands to drink at home, before seeing trade bounce back strongly in the hospitality and travel retail sectors after restrictions eased.
More recently, however, margins in the industry have come under pressure from sharp rises in raw material and production costs.
Figures released by the Scotch Whisky Association last week showed annual exports exceeded more than £6 billion for the first time last year, underlining the sector’s continuing recovery from the pandemic.
Pernod reported a 12% rise in profit from recurring operations to €2.42bn. It said sales in its Asia and rest of the world segment had shown “excellent growth” of 18% to €3.1bn. This was driven by India, Turkey and duty free, with the recovery of the market in south-east Asia also highlighted.
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Pernod benefited in the first half from the favourable timing of shipments to Asia ahead Chinese New Year in January, a key part of the whisky industry calendar.
Mr Ricard told Reuters yesterday that sales had been “soft” in China during the New Year celebrations but in a call with analysts declared: “We feel quite confident about the immediate future in China with the very welcomed lifting of Covid restrictions”.
Mr Ricard said Pernod had been able to “sustain margins in an inflationary context” in the first half and signalled that further price rises would come.
He told analysts: “We’ve had and we’ve carried out some strong pricing across the portfolio in the first half. We intend to continue to do so in the second half.”
Pernod reported growth of 7% in the Americas to €2bn, driven by the US, Brazil and Canada, and 6% in Europe to €1.99bn.
Mr Ricard said: “Our first half performance was very strong, marked by broad-based and diversified growth across all regions and categories.
“In addition, particularly strong pricing dynamic illustrates the attractiveness of our portfolio of premium brands and enabled us to sustain margins in an inflationary context.
“I expect this dynamic growth to continue through FY23 albeit in a normalising environment.”
demonstrating the strength of our strategy and the agility, dedication and exceptional engagement of our teams around the world.”
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