Battling the dollar, Jacob's Creek looks to head upstream
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."
Frequently Asked Questions about this Article…
Jacob's Creek, owned by Pernod Ricard, has been shifting up the price scale to become a more premium wine. The label raised entry-level prices (about $1 a bottle in Australia this year), launched new blends, and invested heavily in advertising to move consumers toward higher-value ranges.
In Britain a price increase from £4.50 to £6 led to volumes dropping by about 1 million cases over three years. In Australia, however, sales have so far remained stable and have even seen slight growth since December, according to Pernod executives.
Yes. Late last year Jacob's Creek regained its crown as Australia's biggest-selling brand after three years off the top spot, while its Reserve and premium ranges are seeing strong development and consumer interest.
Jacob's Creek still has some wines under $10, but a growing portfolio sits closer to $13 (for example, the Cool Harvest range). Its premium St Hugo label can sell for above $50 a bottle, illustrating the brand's wider price ladder.
Pernod's Premium Wine Brands division, which includes Jacob's Creek and New Zealand's Brancott Estate, recorded a 4% gain in sales revenue and a 10% increase in its contribution to Pernod's profit, signalling the value strategy is working.
No. Pernod's CEO said the company had not chased volumes over the past year, instead focusing on revenue growth and upgrading the Jacobs Creek franchise through innovation and marketing.
Pernod Ricard acknowledges a strong Australian dollar presents currency challenges across the roughly 80 countries it sells into. While a strong dollar can complicate export pricing, the company notes a strong Australian dollar often reflects a strong domestic economy.
Innovation (new blends and product ranges) and heavy advertising in Australia are central to Jacob's Creek's premiumisation push. Company leaders say these efforts are helping grow higher-end ranges like the Reserve range and attract consumers to the upgraded franchise.
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