Pernod Ricard banks on digital push to boost growth

2 minute read

A logo is seen on a bottle of the Ricard aniseed-flavoured beverage displayed during French drinks maker Pernod Ricard news conference to announce the company annual results in Paris, France, August 29, 2018. REUTERS/Christian Hartmann/File Photo

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  • Aims for upper end of 4-7% sales growth range over medium-term
  • Aims for 50-60 bps annual improvement in operating margin
  • Focus on pricing backed by predictive proprietary digital tools

PARIS, June 8 (Reuters) - French spirits group Pernod Ricard (PERP.PA) said on Wednesday it was banking on its portfolio of high-end brands and a growing use of data to better predict consumer demand and trends and fine-tune pricing to accelerate sales growth over the mid-term.

The world's second-biggest spirits group behind Diageo (DGE.L), said it would aim to deliver annual organic sales growth at the upper end of a 4-7% growth range over the mid-term.

Pernod, whose brands include Martell cognac, Mumm champagne and Absolut vodka, reiterated it aimed to lift its operating profit margin by 50-60 basis points per year, provided it could deliver annual organic sales growth within the 4-7% range.

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Pricing will be key to protect profit margins in the face of inflationand will be further enhanced by the use of data to predict customers' habits and industry trends, it said.

Overall the rising use of data will allow Pernod Ricard to "offer the right product at the right price at the right time to the right consumer with the right experience for every occasion in every market,"Chairman and Chief Executive Alexandre Ricard told investors attending the Capital Market Day.

"It is all about being more agile in the way we allocate resources and invest behind our brands to increase our pricing power," he said.

Finance chief Helene de Tissot said Pernod Ricard's ambition was "to protect our margins in the face of inflation, be bold in terms of pricing,"

Pernod Ricard also vowed to improve operational efficiency and keep advertising and promotional spending at 16% of sales.

The financial targets unveiled on Wednesday are largely seen a continuation of prior ambitions under the group's three-year "Transform & Accelerate" plan launched in 2018.

By 1053 GMT, Pernod shares were down 1.8% at 178.50 euros, underperforming their European sector (.SX3P) which was down 1.3%.

"The company has not pushed the bar too high, which leaves scope for overdelivery if growth comes through faster, as well as reducing the risk of disappointment if growth comes through slower," Jefferies analysts said in a note.

JP Morgan analysts however noted: "We think for now the continuity of the financial targets offers a reassuring message amid a volatile market and investors sentiment that has turned somehow cautious on spirits,"

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Reporting by Dominique Vidalon; editing by Jason Neely, Frank Jack Daniel and Louise Heavens

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