Pernod Ricard Remains Committed to Advertising Investments Despite Challenging Sales
Pernod Ricard remains committed to its advertising and promotional expenditure, allocating 16% of its net sales to this budget With a focus on maximizing effectiveness, the company plans to leverage brand collaborations to further optimize this spending
The beverages manufacturer, renowned for creating spirits brands such as Jameson, Malibu, and Absolut, witnessed an 8% year-on-year decline in sales, amounting to €3.04bn (£2.64bn) for the quarter. This decrease in sales was primarily attributed to the United States and China, where the company faced tough comparisons from the previous year and encountered weaker consumer demand.
During a discussion with investors and analysts, Hélène de Tissot, the chief financial officer of the company, acknowledged that the current situation continues to present challenges. Nonetheless, she expressed Pernod Ricard's unwavering confidence in consumer patterns and the spirits market's resilience. To align with this confidence, the company has declared its commitment to sustain its existing level of advertising and promotional expenditures throughout the 2024 fiscal year.
The business currently allocates approximately 16% of its net sales towards advertising. In the event of a decrease in sales, the amount of money dedicated to marketing will decrease proportionally due to this ratio-based approach. Nevertheless, the company has affirmed its dedication to enhancing this budget by utilizing digital programs to dynamically optimize it.
In a recent interview with Our Website, the UK marketing director, Leanne Bank, emphasized the role of machine learning in eliminating uncertainty when allocating funds. She specifically mentioned the effectiveness of machine learning tools D-Star and Matrix in improving the company's marketing expenditure.
Pernod Ricard plans to increase its marketing budget during the festive season, surpassing the spending of previous years. The company's emphasis on efficiency has led to higher return on investment for this expenditure. As a result, funds have been allocated towards enhancing the brand equity of its entire portfolio, rather than solely focusing on the popular Jameson and Absolut brands.
Pernod Ricard reported UK sales for its first quarter (which ended in September) were “stable” with “strong” market share performances for its brands in the on-trade.
Brand collaborations
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This week, the collaboration between Pernod Ricard's vodka brand, Absolut, and Coca-Cola's Sprite to introduce a ready-to-drink product was announced. The cans will be available in markets such as the UK and Germany in early 2022.
During an investor meeting today, De Tissot expressed enthusiasm about the union of these two esteemed brands, highlighting their individual strengths.
The launch is in line with Pernod Ricard's consumer-centric strategy and meets the demand for ready-to-drink products, according to the spokesperson. In addition to the collaboration with the Coca-Cola Company, the company has previously entered into brand partnerships. One notable partnership was with Heinz earlier this year to introduce a vodka tomato pasta sauce. This collaboration has been shortlisted in the Brand Innovation category at the Our Website Awards.
