Pernod Ri­card eyes ex­pan­sion in bur­geon­ing youth mar­ket

The Myanmar Times - - International / Business -

FRENCH spir­its maker Pernod Ri­card SA the owner of Martell co­gnac, Chivas Re­gal whisky and Ab­so­lut vodka is bank­ing on China’s grow­ing mid­dle-in­come earn­ers and the younger gen­er­a­tion to dou­ble the size of the mar­ket for in­ter­na­tional spir­its in the coun­try by 2025.

In­ter­na­tional spir­its now ac­count for only 1 per­cent of mar­ket share in China and the com­pany aims to ex­pand that share to 2 per­cent in the com­ing seven years.

De­scrib­ing China as Pernod Ri­card’s “sec­ond bat­tle­ground” be­hind the United States and an “ex­tremely sig­nif­i­cant strate­gic mar­ket”, JeanE­ti­enne Gour­gues, man­ag­ing di­rec­tor of Pernod Ri­card China, told China Daily that the goal of the com­pany is to “main­tain and re­in­force our lead­er­ship in China while grow­ing the mar­ket”.

One of the sig­nif­i­cant changes in China in re­cent years lies in the land­scape of con­sumers, Gour­gues said.

While the coun­try’s mid­dle class is grow­ing rapidly, a younger gen­er­a­tion with a dif­fer­ent life­style from the older gen­er­a­tion is on the rise.

“The younger gen­er­a­tion is be­com­ing the ma­jor driver of busi­ness growth, and adopt­ing new me­dia and con­sump­tion be­hav­ior with new de­mands,” he said.

To cater to these changes, Pernod Ri­card is mak­ing ef­forts in dig­i­tal­iza­tion, hop­ing to take ad­van­tage of China’s fast-ex­pand­ing on­line mar­ket to ac­cess the coun­try’s young peo­ple.

For ex­am­ple, Martell has part­nered with Ten­cent Video, the videostream­ing site of Chi­nese in­ter­net gi­ant Ten­cent, to code­ve­l­ope an on­line entertainment pro­gram.

Ab­so­lut vodka, mean­while, has spon­sored Chi­nese hip-hop show Rap China, which is broad­cast on the pop­u­lar video-stream­ing site iQiyi.

Gour­gues said he ex­pects the Chi­nese mar­ket to achieve dou­bledigit growth this fis­cal year af­ter the firm’s busi­ness grew strongly in the first three quar­ters.

Pernod Ri­card re­ported 19 per­cent year-on-year growth in net sales in the Chi­nese mar­ket for the nine months through March, a sig­nif­i­cant in­crease from 2 per­cent a year ear­lier.

“For the last quar­ter, which is be­tween April and June, in or­der to en­sure long-last­ing growth, this num­ber would be a bit lower.

But for sure, it would be dou­bledigit growth for China this year,” he pre­dicted.

The spir­its mar­ket in China has weak­ened sharply over the past few years due to the govern­ment’s crackdown on ex­trav­a­gant spend­ing among of­fi­cials.

But the mar­ket showed signs of a strong re­bound in 2017. Ac­cord­ing to sta­tis­tics from Chi­nese cus­toms, sales of im­ported spir­its amounted to 6.75 bil­lion yuan ($1 bil­lion) last year, grow­ing 8.03 per­cent year-on-year.

Zhu Dan­peng, an an­a­lyst in the cater­ing in­dus­try, said the re­bound in spir­its sales in China is mainly at­trib­uted to the younger gen­er­a­tion be­com­ing the ma­jor con­sumer group.

“Con­sump­tion sce­nar­ios for spir­its have turned from busi­ness meet­ings to so­cial gath­er­ings and this change has brought new de­mand,” Zhu said. – China Daily

Photo: Agen­cies

A bar­man re­leases drops of chilled wa­ter from a foun­tain into a pon­tar­lier glass of ab­sinthe in the bar area at Pernod Ri­card SA’s ab­sinthe dis­tillery in Thuir, France.

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