Pernod Ricard’s sales slipped last year with further declines expected in the coming months as the spirits maker grapples with trade uncertainty in the US and China.
The owner of Absolut and Jameson reported a 3% fall in organic sales to €10.9bn for the year to 30 June, in line with forecasts.
Next year would be one of “transition”, with improved sales skewed towards the second half, the company said. A drop is expected in the first quarter after US wholesalers stockpiled ahead of US tariffs, while China continues to see weak consumer demand.
Pernod said last year’s sales declined by 6% in the US and 21% in China as the conclusion of an anti-dumping investigation led to an overhang in distributor inventories.
The whole spirits industry is experiencing a period of depressed sales as many consumers grow more cautious with their spending while continuing to moderate their drinking.
Adding to the pain, Pernod has been a collateral victim of global trade wars for almost a year, first hit by China in October as retaliation for EU duties on Chinese electric vehicles. After an agreement was reached in July, Pernod was immediately burdened with tariffs from the US instead.
However, it has cut the expected impact of tariffs from €200m to €80m, with €35m now coming from the US (down from €60m) and €45m from China (down from €140m)
The spirits maker reiterated its guidance for average sales growth of between 3% and 6% from 2027. This was cut from 4% to 7% in February due to “extraordinary trade tensions”.
The company has completed a restructuring plan to cut costs with €900m delivered over the past two years through changes such as near shoring production, and a 12% cut in sales staff numbers.
But it told employees in June it was reorganising the business further to cut costs and eventually headcount by simplifying its corporate structure and centralising some functions, according to Reuters.
This will involve dividing its brands into two units – the first will include its whiskey, champagne and cognac brands, while the second will hold other spirits and aperitifs.
Pernod’s share price is down 9% since the start of the year. Its rival Diageo is down a more punishing 19% over the same period. Last month, Diageo reported a 30% drop in profits as it also battles changing drinking habits and global tariffs.
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