- As vodka experiences slowing growth while a whiskey/bourbon fever takes hold, Pernod Ricard SA, maker of Absolut vodka, is seeing dwindling U.S. sales. However, the U.S. is where Pernod derives about 15% of sales, is one of the spirits industry's prime opportunities for growth, especially in the premium spirits segment.
- Sales volumes for Absolut, which accounts for approximately half of Pernod's U.S. sales, fell 3.3% the last quarter.
- Pernod's profits, however, are still faring well, as Pernod's portfolio is diversified enough to pick up the slack. Pernod also owns Jameson and Martell, and with help from those and other brands, Pernod is still expected to post increased sales and profits in its upcoming earnings report Aug. 27.
According to the Distilled Spirits Council's (DISCUS) 2014 Industry Review, vodka volumes grew 1.6% in the U.S. in 2014, which was slim compared to whiskey's 7.3% growth. Another estimate from liquor market-tracking association IWSR reported that vodka volumes decreased nearly 2% globally between 2010 and 2014 while whiskey consumption increased almost 17% in the same time period. Vodka volumes decreased 0.3% in the U.S. in 2014, according to IWSR.
These figures are hitting many major vodka producers, though some smaller, up-and-coming vodka makers are still finding opportunities for growth. This includes Deep Eddy Vodka with a 130% increase in sales volume last year, which Heaven Hill Brands acquired last week.
For Pernod to remain competitive against industry leaders like Diageo, Pernod needs to find ways to boost Absolut's sales volumes despite the category falling out of favor with consumers. Or, the company may need to follow Heaven Hill's lead and acquire other fast-growing companies to make up for stalled sales in its major brands.