Cracks in the China (Strategy) / by heathrowkennedy

Today's WSJ carries a powerful quote from Pierre Pringuet, CEO of Pernod Ricard "When a country falls from double-digit growth to 7.5%, there are repercussions".   He's talking about China and it's impact on his group's performance - alcohol beverage brands have the ability to flex their offering and Pernod is already trialling less-expensive products on a younger demographic as demand for expensive Cognacs - and they have global reach which means they can squeeze more growth out of another market. Some luxury brands that have ridden the Chinese wave will not have that option.   They have neglected other markets, or just found their offering unpalatable to a wider (Western) customer base.   Their growth has begun to dip and they will find it difficult to replace it elsewhere quickly enough.    Combine this with the fact that the Chinese audience is changing tastes and you have a perfect storm of reduced volume and a quest for new brands.    These brands, already seeing a reduction in footfall will be faced with retrenching their retail footprint and shrinking their ATL activation.   It's a toxic mix.    One that could drive a person to drink. Something that would certainly please Mr Pringuet !