Battling the dollar, Jacob's Creek looks to head upstream
The world's second-largest alcoholic-beverage company, Pernod Ricard, will continue the transformation of its Australian label Jacob's Creek into a premium-class wine, despite price hikes in Britain leading to the loss of 1 million cases in sales.
Relying on innovation, the introduction of new blends and heavy advertising in the Australian market, Jacob's Creek this year raised its price by $1 a bottle for its entry-level wines, following similar price rises in offshore markets.
Pernod chief executive Pierre Pringuet said although sales of Jacob's Creek in Britain had suffered from a price increase to £6 ($A8.80) from £4.50 a bottle, with volumes dropping by 1 million cases over three years, sales in Australia had so far proved stable in the face of a price lift here.
Mr Pringuet said Pernod's Premium Wine Brands division, which houses the Jacob's Creek label as well as New Zealand's Brancott Estate, had not chased volumes over the past year and recorded a 4 per cent gain in sales revenue.
"There had also been a 10 per cent increase in its contribution to [Pernod's] profit, and is really a reflection that our value strategy is working," Mr Pringuet said.
Premium Wine Brands boss Jean-Christophe Coutures said Jacob's Creek had seen "slight growth" in the Australian market since December.
"Our Reserve range is continuing to grow very strongly, so the [Jacob's Creek] brand as a franchise is developing and consumers are following it," Mr Coutures said.
Late last year, Jacob's Creek regained its crown as Australia's biggest-selling brand after three years of being knocked off the No. 1 slot by cheaper labels and supermarket homebrand wines.
Known for its dominance of the sub-$10-a-bottle bracket, Pernod has pumped millions of dollars into the label to support a shift up the price scale, or "premiumisation".
Some of its wines are still available below $10, but a growing portfolio of Jacob's Creek is closer to $13, such as its Cool Harvest range, while its premium St Hugo label can sell for above $50 a bottle.
Mr Pringuet said Pernot just had to live with the high Australian dollar as it faced currency issues in the 80 countries it sells into.
"If the Australian dollar is strong it means the economy is strong which is not bad news by itself, because Australia is such an important market."