Pernod Ricard is said to be considering selling its wine division, which includes its largest wine brands, Campo Viejo and Jacob’s Creek.

A report published in Bloomberg this morning claimed the company was in “early discussions” on a potential sale of the $500 million unit, quoting sources “familiar with the matter”, who wished to remain anonymous.

Pernod Ricard reportedly told Bloomberg in an email they did not comment on speculation, adding that “The group was under no external pressure and has already mentioned several times that it intends to continue the dynamic management of its portfolio.”

However, speaking to db at a press briefing last month, CEO and chairman Alexandre Ricard revealed that he would continue to “dispose” of brands that “no longer fit” within the drinks giant’s portfolio, following the sale in January of Argentine wine brand Graffigna to Chile’s VSPT.

At the time, Ricard said the company was “committed” to growing value sales over volume sales. “Our wine volume sales are down by 8% due to our value focused strategy, which we’re not afraid of pursuing,” he said.

The company’s wine brands include Australian giant Jacob’s Creek from Barossa Valley, which was today named as the third most powerful wine brand in the Global Wine Brand Power Index compiled by Wine Intelligence. Other brands in the stable include Rioja brand Campo Viejo, New Zealand’s Brancott Estate, Stoneleigh and Church Road, boutique brand Ysios, and California brand Kenwood in Sonoma, which it bought in 2014.

In January Pernod Ricard announced it was selling its Graffigna, Colón and Santa Silvia wine brands to Chilean wine giant VSPT for an undisclosed sum, as part of the ongoing plan to strip back volume driven listings that focus on discounting.

The company’s Graffigna winery and vineyards at Pocito and Cañada Honda in San Juan and La Consulta in the Uco Valley in Mendoza were also included in the deal.

It follows the announcement in December that US-based hedge fund Elliott Management had taken a stake in the French company, although it berated the company for its “disappointing” track record in merger and acquisitions and underperformance.

Pernod is not the only large company divesting its wine brands – rival Diageo sold its wine business in 2016 to Treasury Wine Estates for £361 million, while last month group Constellation confirmed rumours that surface in October that it was offloading around 40% of its wine brands to concentrate on its higher priced power brands.

An article from The Drinks Business by Arabella Mileham


Pernod FY profit up 13% as China bounces back


Pernod Ricard’s net profit totalled €1.39 billion (US$1.65bn) in 2016/17, driven by a return to sales growth in China, a strong performance from its international brands, and tight cost control management.
In the French group’s full financial year ending 30 June, sales grew by 3.6% organically – without the impact of currencies and acquisitions – to reach €9.01bn (US$107.1bn).
Pernod, maker of Jameson and Chivas Regal, credited the acceleration in part to the performance its Strategic International Brands, which were up by 4% on the previous year.
The group highlighted a return to growth for Cognac brand Martell and vodka brand Absolut, up by 6% and 2% respectively.
Geographically, improvements were driven by the US, Eastern Europe, Global Travel Retail and China – which returned to sales growth for the first time since 2013.
Meanwhile the Americas region grew by 7%, Europe was up by 3% and Asia-Rest of World enjoyed a 1% sales boost.
A third of the group’s growth was driven by innovation – new products or line extensions of existing brands.
In January, the group introduced a lime variant for Absolut, and launched caviar-infused vodka brand, L’Orbe in March.
Pernod Ricard continued to actively manage its portfolio in 2016/17, acquiring majority stakes in Smooth Ambler, and Del Maguey, and disposing of vodka brand Frïs, brandy and sherry business Domecq, and the Glenallachie distillery. The firm also acquired a majority stake in Corby Spirit & Wine, owner of the Ungava gin brand.
Fourth quarter sales rose by 3% organically and 5% on a reported basis – taking into account the impact of exchange rates and acquisitions – “broadly consistent” with underlying trends.
Alexandre Ricard, chairman and chief executive officer, said: “FY17 was a strong year, delivering profit from recurring operations in line with guidance together with an excellent cash performance.
“These results demonstrate that the strategic direction the Group adopted two years ago is delivering: growth is accelerating and diversifying through successful activation of our strategy.”
Looking ahead, he said Pernod will continue to implement its roadmap, focusing on digital, innovation and operational excellence.
“We are confident that we will continue improving our business performance. As a consequence, our guidance for FY18 is organic growth in profit from recurring operations between +3% and +5%,” he added.

An article from The Spirits Business by Annie Hayes