Pernod Ricard says it's confident about its recovery prospects in China even though an economic slowdown is leading to ''soft'' sales. As Hayley Platt reports the French drinks group also says U.S. drinkers are changing their habits.
When Pernod Ricard acquired the Absolut Vodka brand in 2008 it was hoping sales would speed up in its two key markets. And they did for a number of years. But habits change - U.S. drinkers are now favouring brown spirits such as Bourbon. And a clampdown on luxury gift giving has led to a 2 percent sales fall in China. The French spirits maker is adapting. But overall profits for the year, up 2 percent to more than $2.5 billion, missed expectations. The group talked of a "tough environment" and took a 400 million euro writedown on Absolut. And with China's economy slowing, they may not be the only business facing growth challenges, says Commerzbank's Global Financial Economist Peter Dixon SOUNDBITE: Peter Dixon, Global Financial Economist, Peter Dixon, saying (English): "Companies which are thinking about investing in the region, they will think twice about whether they want to raise their exposure that this stage, they may wish to postpone their activity." Pernod-Ricard's chief financial officer Gilles Bogaert still hopes for high single digit sales in China. And he has no plans to part with Absolut Vodka - as he see sales in the U.S. stabilising within three to five years. The once small family business now has annual sales of 8 billion euros and is a global giant behind market leader Diageo. It plans to hand investors an improved dividend of 10 percent. But expects sales of its Absolut, Martell cognac and Jameson whiskey brands to grow more slowly. Shares fell 6 percent before recovering slightly.