French spirits maker Pernod Ricard is still confident sales will pick up later in the year despite a sizeable fall last quarter due to a lack of drinking in the US and China.
The maker of Beefeater gin and Absolut vodka saw sales fall 7.6% to €2.4bn (£2.1bn) in the three months to September, slightly behind an analysts’ consensus of 7.1% compiled by Reuters.
Sales in China fell 27% as consumer demand remained weak through the summer. Cognac sales are particularly down, although the group’s premium brands like Jameson whiskey showed strong growth.
The group said it “remains cautious” on demand in China ahead of the important new year period in February.
In the US, uncertainty over tariffs led distributors to boost their inventory levels before the summer and sales consequently fell 16% in the latest period. Pernod noted, however, that key brands including Jameson, Absolut and Kahlúa all outperformed the market.
“The US spirits market remains weak, and destocking continues,” said Bernstein analyst Trevor Stirling.
In Europe, Spain is stabilising while Germany’s rate of decline eased. France and the UK are in modest decline.
Pockets of growth do remain though with RTDs driving strong in Canada and Turkey, Japan, and South Africa all showing strong growth. India, outside the state of Maharashtra, which just brought in a new 50% excise duty, also delivered robust sales.
The world’s second-largest spirits group is still bullish on improved sales in the second half of the year, reiterating its guidance for between 3% and 6% annual organic sales growth for 2027-2029, along with annual organic margin expansion.
It has also launched a restructuring plan to cut €1bn of costs and said it would defend its operating margin “to the fullest extent possible.”
Pernod’s share price is down by a third over the last year, with Jefferies analyst Edward Mundy expecting little change “given [the] absence of clear green shoots” in these results.
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