Pernod warns of "stagnating" wine and spirits market

Drinks giant Pernod Ricard said today it believed "an overall stagnation" of the wines and spirits industry will continue for at least the next 12 months.

Noting the ongoing "difficult economic environment" and that there would be "contrasting situations depending on countries and categories", Pernod said first and second half comparisons for the next financial year would be markedly different, with a tougher first half and more favourable comparisons for the second six months of the year.

Boosted by a strong performance in the US, drinks giant Pernod, which owns brands including Absolut vodka, Martell cognac and Glenlivet whisky, reported net turnover for the year to June 30, 2009 up more than nine per cent at €7.2bn (£6.34bn).

Overall operating profits rose more than a fifth to €1.76bn (£1.55bn).

Despite seeing sales of champagne and Absolut slip in the US, Pernod said profits in the region leapt 51 per cent, thanks to the integration of Absolut and a favourable exchange rate.

While sales of Absolut had slowed in the US due to factors such as changes to distributors, retailer destocking and a decline of the all important on-trade, Pernod said the brand had shown strong sales in other markets, notably the UK, Spain, France and Germany.

Pernod said volumes of 14 key strategic brands, excluding Absolut, had fallen four per cent and were unchanged in value.

The group's net debt rose 77 per cent to €10.9bn (£9.6bn), driven by factors including the strength of the US dollar, the Vin&Sprit acquisition and the payment of cash dividends.

Pierre Pringuet, Pernod's chief executive, said: "Despite a particularly difficult environment, the group achieved a very satisfactory performance in the year just ended.

"We start 2009/10 with confidence and determination: our priorities are clear, continue to reduce debt and strengthen investments behind our strategic brands."