India note ban, liquor curbs hit Pernod Ricard sales growth
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Bengaluru: French distiller Pernod Ricard SA reported 1% sales growth in India during the nine months that ended 31 March 2017 and said there was a temporary growth deceleration in the country during the three months to March due to demonetization, in a presentation on its website on Thursday.
In comparison, its India sales grew 14% year-to-date during the same period in the previous year, i.e. the nine months ending 31 March 2016.
Pernod’s second and third quarter sales—it follows a July to June financial calendar— were hit, as expected, by spillover effects from the Indian government’s decision to withdraw high-value currency notes from circulation in November.
While the demonetization impact has now run its course, the Supreme Court’s order in December banning the sale of liquor within 500 metres of all state and national highways is expected to hit Pernod’s India sales over the next three quarters, starting with the April-June period.
Indeed, the highway ban is expected to lead to an average 8-10% dip in sales in the first quarter at liquor firms and outlets, Mint reported in early April. The pinch will also be felt in India’s hospitality sector with a Crisil research report saying 25-30% of premium segment hotels will bear the brunt of the ban, with the most significant hit on hotels in Pune, Kolkata and Agra.
Pernod, which sells brands such as Blender’s Pride and Chivas Regal in India, reported global nine months to March sales growth of 4%. Its sales for the first nine months of the financial year 2016-17, i.e. until March 2017, totalled € 7,047 million.
“We have strong year-to-date sales growth at 4%. In an uncertain environment, our strategy is consistent and driving results, in particular in terms of diversifying the sources of growth. We confirm our FY17 guidance of organic growth in profit from recurring operations of between 2% and 4%,” Alexandre Ricard, chairman and chief executive officer of Pernod said in a statement on the firm’s website.