Sales of Absolut Vodka increased by five percent during the just-concluded financial year, and the factories have been running at high pressure since last summer. This is good news for Scanian farmers who sell around 10 percent of their wheat harvest to the French-owned spirits giant.
Stephanie Durroux, CEO of Absolut Company. Photo: TT / Press image.
The pandemic has fundamentally changed the way consumers not only buy food, but also how they buy alcohol. When restaurants, bars and hotels have closed their sales instead, they move to the grocery store. For Absolut Vodka, based in eastern Skåne, it has been a challenge because restaurants are an important part of all vodka sales, which historically account for 30 percent of Absolut Vodka’s sales. But the recent financial statements for the financial year July-June indicate that the company has managed to adjust fairly well. Sales of 95 million liters mean an increase of two percent and with price effects for growth of five percent.
– It is actually our best growth in five years so we are very satisfied. We have succeeded in responding to the increased demand in stores and also in e-commerce. At the end of the period, we also benefited from restaurants and bars began to reopen, says Stephanie Durroux, CEO of Absolut Company, which is part of French Pernod Ricard, the world’s second largest spirits producer.
Within her business area, there are also the brands Kahlua and Malibu, but it is the classic Swedish vodka that is clearly important. Measured in volume, even Absolut Vodka is the single largest international spirits brand in the entire group, ahead of the Jameson and Ballentine’s whiskeys.
In addition to changing covid-19 how we buy alcohol, Stephanie Durroux believes that the pandemic is also changing what consumers demand.
– A trend is that spraying grows at the expense of beer and wine. Another trend is that consumers increasingly want ready-mixed drinks and cocktails. This ‘ready to drink’ segment is forecast to grow by 30 percent annually according to the analysis companies and my perhaps biggest challenge in the future is that we keep up. We have historically been small in the segment but have now launched some ready-made drinks in selected markets.
Are you gaining market share in the vodka segment?
– It is too early to say yet, I have to wait for the competitors’ figures. But I know we are gaining market share in key markets such as the UK and China, says Stephanie Durroux, who took over as CEO of Absolut Company a year ago.
Absolut Vodka was previously part of state-owned Vin & Sprit, which was bought by Pernod Ricard for SEK 55 billion in 2008. The listed spirits giant sold all parts except Absolut Vodka, which is still based in eastern Skåne, despite 99 percent of all production being exported. . Alcohol production takes place in Nöbbelöv and the packaging in Åhus, a mile away. The factories here are at high pressure and this summer the company introduced two shifts and work on Saturdays.
– Demand is driven by restaurants opening up, China going strong and some new launches becoming big sellers in a short time, such as our watermelon-flavored vodka, says Stephanie Durroux and points to another factor that better increased resources just now, namely a change in the design of all bottles.
She will recognize the classic design of the bottles, which has been an important success factor for the company. On these bottles, you can read in old-fashioned fonts that the vodka is distilled “from grain grown in the rich fields of southern Sweden”.
Is this something I can change to have more flexibility in production?
– No the opposite. In information texts on the bottles, we will further emphasize that the raw materials come from Sweden. We are a premium brand and our customers are willing to pay because it is Swedish raw materials.
There are thus no plans to abandon Scania, which is good news for Scanian farmers. Absolut Vodka accounts for about 10 percent of the total wheat harvest and is thus an important customer for the farmers.
The whole of Pernod Ricard increased sales by 4.5 percent during the just-concluded financial year. The operating margin landed at 27 percent.