Pernod Ricard buys stake in Lewis Hamilton’s non-alcoholic spirit

Pernod Ricard has bolstered its position in the non-alcoholic drinks market by acquiring a minority stake in Almave, an alcohol-free agave spirit co-founded by Lewis Hamilton.
Almave was launched last year by the Formula One motor racing driver in partnership with Casa Lumbre, a Mexican spirits group, and is being marketed as the first non-alcoholic blue agave-based spirit, distilled in Jalisco, Mexico. It was created as an alternative to tequila.
Pernod Ricard said its investment in Almave was in line with its wider push into the high-quality, non-alcoholic drinks sector. In addition to a zero-proof version of its Beefeater Gin, the French company’s brands include Ceder’s, a distilled non-alcoholic botanical spirit, and Jacob’s Creek Unvined, a range of wines with less than 0.5 per cent alcohol.
Pernod Ricard said it would bring its “strong experience in brand-building and global distribution to help to scale this first-of-its-kind product to several markets throughout the world”. Almave is the fourth collaboration between Pernod and Casa Lumbre.
Drinks with low or no alcohol are said to be especially popular among younger adults. This month CGA, a consultancy, found that almost a third of Britons aged 18 to 24 report drinking less than they did a year ago, with 13 per cent abstaining completely.
There was more good news for Pernod as China surprisingly decided against the imposition of provisional new tariffs on French cognac imports in its escalating trade war with Brussels, although additional taxes could yet be changed from the end of the year. Pernod owns Martell cognac and the news sent the company’s shares up by as much as 12 per cent. Rémy Cointreau, a rival cognac maker, jumped by a similar amount, although they gave up some of their gains later. Shares in Pernod were up by €2.55, or 2 per cent, at €131.15 at the close in Paris. Rémy’s shares rose by €31.45, or 2 per cent, to €73.60.
Pernod also unveiled full-year results that were broadly in line with expectations, albeit with a cautious note about a return to growth next year.
In the fourth quarter, its sales were up by 3 per cent on an organic basis, beating expectations in the key Americas region but falling short in Asia and the rest of the world. For the full year, net sales fell by 4 per cent to €11.6 billion, a 1 per cent decline on an organic basis, while organic operating profit was up by 2 per cent at €3.12 billion, slightly ahead of market expectations.
Sales in the United States fell by 9 per cent, while China was down by 10 per cent amid a “challenging macroeconomic environment and continuing weak consumer sentiment impacting demand”. Scotch whisky brands suffered in both countries.
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Edward Mundy, at Jefferies, the broker, anticipated a “soft” first quarter in the coming year, with inventory adjustments in America, a very weak Chinese market and a good performance in the rest of world.
Pernod reiterated its confidence in “medium-term financial framework of aiming for the upper end of 4 per cent to 7 per cent organic net sales growth” and a margin improvement of 50 to 60 basis points.
Chivas Brothers, Pernod’s Scotch whisky division, said that after excluding the impact of its exit from Russia, its net sales were up by 1.4 per cent year-on-year. That was largely a result of price increases in the second half of the financial year helping to offset weaker volumes in key markets. The upmarket Royal Salute whisky brand was said to have had its best year on record, with sales up 5 per cent. Ballantine’s was up by 1 per cent, but Chivas Regal down 1.2 per cent.
The Glenlivet single malt was down by 6 per cent, mainly because of a weaker performance in North America. Chivas Brothers said its total Scotch whisky sales in that region had fallen by 19 per cent, with Central and South America declining by 8 per cent. Western Europe grew by 5 per cent, however, Japanese ales jumped by 22 per cent and Africa and the Middle East by 35 per cent, led by strong trading in Turkey. China was down 1 per cent across the year.