Pernod Ricard says needs time to assess impact of legal cannabis

PARIS (Reuters) - Pernod Ricard PERP.PA needs 12-18 months before it can determine whether the legalization of cannabis will dent the consumption of premium spirits, the company's chief executive said on Wednesday.

FILE PHOTO: A small marijuana plant grows in a lab at the new Commercial Cannabis Production Program at Niagara College in Niagara-on-the-Lake, Ontario, Canada, October 9, 2018. REUTERS/Carlos Osorio/File Photo

“To date there is no evidence that the legalization of cannabis will have an impact on the consumption of premium spirits. We continue to monitor it,” Alexandre Ricard told the annual shareholders meeting. “We must give ourselves 12-18 months to be in a position to assess it.”

Eight U.S. states, including California and Nevada, have legalized marijuana for recreational use, and Canada became the first industrialized nation to legalize recreational cannabis last month.

Some studies show consumers would buy the drug instead of alcohol if it was freely available.

Rival Constellation Brands STZ.N has bought a near 10 percent stake in Canadian cannabis maker Canopy Growth Corp to take advantage of any future boom, as more jurisdictions consider legalizing the drug.

Coca-Cola Co KO.N is also closely watching the fast-growing marijuana drinks market for a possible entry that would expand the world’s largest soft drink maker’s ambitions further away from sugary sodas.

Alexandre Ricard also told shareholders that the world's second-largest spirits market after Diageo DGE.L was working on a new three-year strategy plan.

This comes after Pernod Ricard, which makes Absolut vodka and Martell cognac, exceeded in fiscal year 2017/18 the medium-term sales growth goals it had set in June 2015, the year Ricard took over as chairman and CEO.

Pernod Ricard delivered underlying group sales growth of 6 percent in the year ended June 30, driven by a 17 percent jump in sales in China. This compared with a medium-term target of 4-5 percent sales growth.

“Our goal is to consolidate that acceleration, to deliver a durable and profitable growth,” Ricard told shareholders, without providing new targets.

Reporting by Dominique Vidalon; editing by Richard Lough