Prices of some of Britain's best-loved spirits may be on the rise in coming months after the boss of spirits giant Pernod Ricard (Pernod) confirmed to investors that it would need to "adjust" prices in order to protect margins after sterling's recent slump.
Pernod's finance chief, Gilles Bogaert, revealed the plans to increase prices in the UK after the group posted first quarter results that beat expectations, leading to its share price rising over two per cent.
First quarter sales at the owner of Absolut vodka were €2.2bn (£2bn), an "organic" increase of four per cent compared with the same period last year, this was ahead of consensus expectations of 2.9 per cent growth according to a poll by Thomson Reuters.
Sales in the Americas increased by three per cent to €649m and European sales edged up by four per cent to €682m.
Asia and the rest of the world fared less well, down two per cent to €917m – this was, however, flat on an "organic basis".
Why its interesting
Last week's "Marmitegate" saga, where Tesco experienced "supply" issues with some of Unilever's amid reports that the it wanted to increase prices to compensate for the weakened pound, is fresh in the memory of many consumer companies.
The comments by Bogaet could be a sign that competitors will follow with similar announcements.
Meanwhile, reflecting on the first quarter performance, Phil Carroll, an analyst at Shore Capital, called them "solid" but added that the results were "not quite a strong at first glance when taking the technical impact into account but still in line with where we expect the company to be at this early stage in the year".
What Pernod said
Chairman and chief executive Alexandre Ricard said:
We have had a good start to the financial year, consistent with our full year guidance. Therefore, we confirm our FY17 guidance of organic growth in profit from recurring operations of [growth] between two per cent and four per cent.
We will continue to implement our long-term growth strategy, focusing investments behind our priority brands, markets and innovations and remaining disciplined on pricing and costs.