Pernod Ricard, the world’s second-largest distiller, reported sales growth that beat estimates as demand for Jameson Irish whiskey surged in the U.S.
Organic revenue rose 4 percent in the first quarter of the Paris-based company’s fiscal year, beating the median analyst estimate of 2.7 percent growth. The shares rose as much as 3 percent to the highest since July 2015.
Jameson, which accounts for about 70 percent of the global Irish whiskey category, helped sales gain 8 percent in the Americas region amid a revival of traditional cocktails such as the Old Fashioned and the Manhattan. The whiskey’s popularity helped offset weakness in China, where demand for expensive cognacs and Scotches has waned due to a government crackdown on graft.
“The brand continues to grow in almost every state in the U.S., which is a robust market as gas prices remain low and consumer confidence is still high,” Chief Financial Officer Gilles Bogaert said in an interview. Bogaert said he sees no reason why Jameson can’t sell 5 million cases of 9-liter bottles per year in the U.S., up from 3 million cases today.
Irish whiskey was the fastest-growing spirits category in the U.S. last year, expanding 16 percent, or almost twice the pace of bourbon, according to the country’s Distilled Spirits Council. Pernod Ricard’s Irish Distillers unit, which includes Green and Yellow Spot whiskies, has kept the category relevant to U.S. drinkers by ageing Jameson in craft beer barrels.
In addition to Jameson, Americans are also drinking more of the company’s Avion and Altos tequilas and champagnes including Mumm and Perrier-Jouet, Bogaert said. Sales of its Martell Blue Swift, a cognac finished in bourbon casks, are also driving growth, he said.
President Barack Obama’s lifting of a $100 limit on cigars and rums that American travelers can bring back from Cuba could be a further boon to the company as it could buoy sales of Havana Club, the executive said.
Pernod Ricard shares were up 2.2 percent at 110.85 euros as of 12 p.m. in Paris. They’ve risen 5.4 percent this year, compared with a 20 percent surge in rival Remy Cointreau SA.
“First-quarter revenue confirms that after several years of hiatus, growth is starting to renew,” Edward Mundy, an analyst at Jefferies, said in a note.
Organic sales in the division including Asia and Africa were unchanged, missing estimates for 2.5 percent growth. The company is confident it can show some improvement in China for the full year, “but I can’t commit at this stage that we’ll be back to growth,” Bogaert said.
The distiller reiterated its forecast for earnings growth of 2 percent to 4 percent this year.
Earlier in the week, Remy Cointreau reported sales that beat estimates, helped by American demand for Remy Martin cognac and a rebound in China. Pernod Ricard’s organic figures exclude acquisitions, divestments and currency fluctuations.
News by Bloomberg, edited by Hospitality Ireland