Pernod Ricard, the owner of Martell cognac, has lots of other products in their portfolio. But the high-end luxury liquor business is tough at the moment, at least in the establised markets US and Western Europe.
Pernod has a problem in western Europe because sales decline here (and in the US), while having growth in China. So as the ad below says: “The choices we make define who we are”.. Question remains what noble choice Martell will make regarding declining sales.
Consumers in struggling countries such as Spain and Greece of course do not think of getting the latest high-end XO blend.
Pernod sees difficulties in western Europe
Sales dropped by 10% in western Europe, 6% in America. Analyst Rob Mann (Collins Stewart Plc, London) comments
“The larger trends in Europe and the U.S. remain weak and will undoubtedly hamper the ability of the industry to drive profit growth in 2011”
Mann recommends a “sell” on Pernod stocks, in other words “get rid of that stuff”… while competitor Remy Cointreau is doing quite well. The third drinks player, and the biggest, Diageo also increased its value a little bit.
So Europe is playing a less important role. What about the US? Also difficult. As annonced yesterday, the US government will support the national economy with a boost-activity. Unemployment goes up, and that of course has a certain effect on consumption.
As Cognac Expert reported, Martell’s strategy is to invest into their premium brands – especially in emerging markets such as Russia or South Korea. As China grows and grows – Thailand remains difficult as a cash cow. The political situation does not allow healthy business development.