Pernod Ricard sales fall 7.6% as weak demand hits China and US
Pernod Ricard’s quarterly sales have slipped to €2.38 billion as demand weakens in China and the US. However, growth in India was able to partly offset the decline. Ron Emler reports.
Pernod Ricard predicted that its first quarter sales in the three months to the end of September would be weak and so it proved. They fell by 7.6% compared with last year due to weak consumer demand globally and weak destocking in China and the United States.
The reported sales of €2.384 billion were slightly below the forecasts of analysts who had foreseen a drop of 7%.
Although sales in the US were 16% lower, Pernod Ricard noted that stockists had boosted inventories last year in the expectation of a second Trump presidency. However, it said it was “encouraged” that its performance in the US was continuing to improve against the overall market.
Chinese market
Sales to China fell by 27% as the economy remained subdued, meaning that the sales during the recent mid-autumn festivals were “soft”. In the aftermath of the effective six-month closure of the Cognac market in China, Martell sales were particularly hit.
Pernod Ricard said it remained cautious on demand in China ahead of the important Chinese New Year festive period that starts in mid-February.
The impact of the China dispute also hit Pernod Ricard’s global travel sales, which were down by 15%.
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India, Europe and the UK
Sales to India, the group’s second largest market after the US, rose by 3% but were restrained by the 50% duty increases in Maharashtra.
In Europe, sales were 4% lower than last year, with the UK reflecting the loss of the wine portfolio sold to Vinarchy.
Premium sales
The group’s premium portfolio of strategic international brands suffered a 9% sales fall largely due to the China wrangle’s effects on Martell and the weaker demand for Jameson and Absolut in the US.
The French company said it continued to expect the improving sales trend to be skewed towards the second half of the year, beginning in January.
Over the medium term, it predicts average annual organic net sales growth in the range of 3% to 6% in the financial years 2027 to 2029, which begin next summer.
That is a lower growth rate than achieved in the pre-Covid years and foretells more modest longer-term expansion for the industry.
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