Pernod Ricard looks to data to protect its margins

Paris — French spirits group Pernod Ricard said on Wednesday it is 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.

The world’s second-biggest spirits group behind Diageo said it  aims to deliver annual organic sales growth at the upper end of a 4%-7% range over the medium term.

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

Pricing will be key to protect profit margins in the face of inflation and will be 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”, chair and CEO 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 is “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 as a continuation of prior ambitions under the group’s three-year “Transform & Accelerate” plan launched in 2018.

By midmorning on Wednesday, Pernod shares were down 1.8% at €178.50, underperforming their European sector, 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.

JPMorgan analysts 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.”

Reuters