Pernod Ricard set to simplify structure in cost-cutting exercise

Pernod Ricard has confirmed plans to streamline the business and reduce costs by splitting its brands into two main divisions.

It is a response by the French group to strengthening headwinds in the global spirits market as the owner of Jameson, Absolut and Havana Club struggled to perform amid weakening consumer confidence around the world.

The restructuring, which came to light after Reuters got hold of an internal Pernod presentation, is expected to lead to mass redundancies, but details have not yet been confirmed.

The simplification of the group structure will see the company divide its brands into two separate divisions, with one to hold the whiskey, cognac and champagne brands, while the second will house rum, vodka and aperitifs.

Pernod reportedly dubbed the project ‘Tomorrow 2’, with the two new units to be called ‘Gold’ and ‘Crystal’.

“At Pernod Ricard, we work on an ongoing basis to adapt our organisation and ways of working to the fast-evolving business environment,” said a company statement.

“That is why we have announced to all our employees an internal project aimed to create a more agile and simplified organisation aligned with our strategic objectives and the current evolution of our business. These changes imply the launch of local consultation processes with our social partners and employees where necessary, therefore we cannot comment any further at this stage.”

It follows a period of sliding sales across the spirits industry, with drinkers cutting back on spending in the category in the midst of inflationary and economic worries.

Back in February, Pernod slashed its sales forecasts for the year in response to Chinese tariffs on brandy imports from the EU and uncertainty caused by US tariffs. The group expected organic sales to fall by a low single-digit percentage in 2025 after previously forecasting growth of 4% to 7%. It also announced a plan to cut €1bn in costs between 2026 and 2029 in response to the stalling top line.

In April, the group reported a bigger than expected fall in third-quarter sales of 4%, more than double the predicted decline as it battled disruption in China and India.

Pernod also disposed of its international wine business in May to the owner of Accolade Wines for an undisclosed sum.