Jacob's Creek push upmarket to grow
The world's second largest alcoholic beverage company, Pernod Ricard, will continue the transformation of its Australian Jacob's Creek label into a premium wine, despite price rises in Britain that led 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 the price of its entry-level wines by $1 a bottle after similar price rises in overseas markets.
Pernod chief executive Pierre Pringuet said although sales of Jacob's Creek in Britain had suffered from a price increase to £6 ($9) 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 rise here.
Mr Pringuet said Pernod's Premium Wine Brands division, which houses Jacob's Creek as well as New Zealand's Brancott Estate, had not chased volume 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 chief Jean-Christophe Coutures said Jacob's Creek had recorded "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 beaten by cheaper labels and home brand wines owned by supermarkets.
Known for its dominance of the sub-$10 bracket, Jacob's Creek has had millions of Pernod dollars pumped into it to support a shift up the price scale, or "premiumisation".
Some of its wines are still available below $10, but a growing portfolio is closer to $13, such as the Cool Harvest range, while its top-shelf St Hugo can sell for more than $50 a bottle. Mr Pringuet said the high Australian dollar was a fact Pernod had to live with, an issue in several of 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," he said.