March 20, 2012 / 4:52 PM / in 6 years

Pernod Ricard confident on China price increases

PARIS, March 20 (Reuters) - French drinks maker Pernod Ricard said increasingly affluent Chinese customers will absorb price increases on its Martell cognac and whisky brands without denting strong Asian sales growth.

The world’s second-largest spirits group after British rival Diageo expects double-digit growth in Chinese sales volumes for Martell this year even after raising prices last month, Asia chief Pierre Coppere said on Tuesday.

“We increased prices 5-10 percent for Martell cognac and 3-10 percent for whisky brands after the Chinese New Year,” Coppere told a conference call on the group’s Asia business.

“We feel confident that the consumer will accept such price increases,” he said. “We think this is sustainable.”

With a 48 percent market share, Pernod Ricard is the leader in super-premium spirits in China, the company’s second-largest market after the United States. The growth of wealthier classes in China, India and Vietnam has also made Asia the top region for sales and operating profit.

Last month, Pernod raised its annual profit target, banking on strong Asian demand and a recovering U.S. market to offset Western Europe’s softer economic climate.

In the first half of the company’s 2011-12 fiscal year, Asia accounted for 37 percent of group sales and 38 percent of current operating profit. Super premium brands accounted for 70 percent of sales in the region.

In India, Pernod Ricard’s fifth-largest market, the company also leads with a 48 percent share in volume of premium local whiskies.

Pernod is also looking at opportunities to tap new Asian markets such as Mongolia, Laos, Cambodia and Myanmar. The company has said its current brand portfolio will continue to deliver growth in China without the need to add a local brand.

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