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  • Pernod Ricard steps up Russia exports

    Pernod Ricard steps up Russia exports

    By Scheherazade Daneshkhu, Consumer Industries Editor
    Financial Times
    Sept 3 2014


    Pernod Ricard, producer of Absolut vodka and Chivas Regal whisky, is
    ramping up exports of its brands to Russia in anticipation of possible
    retaliation by Moscow against Western sanctions.

    Pierre Pringuet, chief executive of the French distiller - the world's
    largest after Diageo of the UK - said: "We are importing as much as we
    can for our [Russian] inventories because an embargo or retaliatory
    action could happen any time."

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    http://www.ft.com/cms/s/0/045f6736-3386-11e4-85f1-00144feabdc0.html#ixzz3CJ5tPTtE

    The group is shipping extra supplies of its Jameson Irish whiskey,
    Ballantine's scotch, Absolut vodka and wines.

    The disclosure underscores the uncertainty faced by businesses
    operating in Russia as Europe prepares to impose tougher sanctions
    against Moscow over its attitude to the territorial independence of
    Ukraine, despite signs of moves towards a ceasefire on Wednesday.

    Pernod Ricard, which last week reported a 13 per cent fall in annual
    profits, mainly because of a drop in sales of its upmarket cognac and
    whiskies in China following the government crackdown on lavish
    entertaining, said the situation in Russia was its biggest concern.

    "Russia is a serious worry," Mr Pringuet said. The group's action is
    aimed at defending its position in the country where sales increased 5
    per cent in the year to June 30, despite the escalating political
    tension.

    Mr Pringuet said the group's Ararat brandy produced in Armenia would
    be unlikely to be affected by a potential backlash against Western
    imports, but the brand accounted for just one-third of its total
    Russian sales.

    Mr Pringuet was more optimistic about China, where the company has
    suffered a 23 per cent drop in full-year sales but recorded an
    improvement in its final quarter.

    "We think there is a gradual improvement," he said, adding that there
    appeared to be fewer government swoops on banqueting outlets. The
    company had shifted its focus from the top end of the market by
    introducing lower-priced premium drinks to target the middle class.

    Mr Pringuet, who will hand over to Alexandre Ricard, nephew of the
    company's founder, when he turns 65 in January, acknowledged that the
    US performance of its Absolut brand - bought for EURO 5.3bn in 2008 - had
    been a disappointment.

    Though the group had accelerated the brand's development outside the
    US - its single biggest market - it has lost market share within the
    country.

    "We are not pleased with the performance," he said, which he
    attributed in large part to a proliferation of "fancy-flavoured"
    vodkas and start-ups with "questionable" craft claims, given their
    sometimes industrial-scale alcohol production.

    "Though 99 per cent or more of these new entrants won't survive, they
    do take market share," he said.

    Mr Pringuet said that despite the group's relatively high debt, it
    still had headroom to make acquisitions running into billions of
    euros. "Maybe not EURO 10bn but a few billion," he said.

    http://www.ft.com/cms/s/0/045f6736-3386-11e4-85f1-00144feabdc0.html#axzz3CJ5mGd7A




    From: A. Papazian
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