Some three billion shots of Absolut were poured down gullets worldwide in the past year or so, according to the vodka’s maker, Pernod Ricard. The volume of vermouth and olives that went down with it cannot be ascertained. Also unknown: how much was knocked back by Pernod investors in the past six months, as its shares have fallen a tenth while European stocks and UK rival Diageo have toasted modest gains.
A big part of the problem is Pernod’s high exposure to emerging markets, particularly China. At a different time, that would be a strength. Its Asia/rest of world segment (that includes Africa and the Middle East) accounted for 40 per cent of sales in its last fiscal year, which was reported yesterday. More importantly, it contributed three-quarters of Pernod’s annual growth (the Americas contributed the rest; Europe, and especially France, look depressingly sober).
Management called out a second-half slowdown in China. And the annual growth that the company achieved there – 9 per cent – was helped by inventory restocking. Pernod had already suggested that China was slowing, and Rémy Cointreau’s fast-falling cognac sales in China had already given ample warning that conspicuous consumption trends there were in decline. So the shock was mild. Pernod’s shares barely fell.