Pernod posts 27% Q1 drop in China
Martell owner Pernod Ricard saw first-quarter organic sales decline by 7.6% after China and the US fell by double digits.
For its first quarter (July to September), French firm Pernod Ricard saw revenue drop by 14.3% on a reported basis to €2.38 billion (US$2.77bn). It followed a full-year decline of 3% for the group.
The Paris-based firm was hit hardest in the US and China, where it experienced a decline of 16% and 27% respectively.
The company’s sales in the US were also affected by some inventory adjustments.
Total sales in the Americas region fell by 12% to €641 million (US$747m), with ‘strong growth’ in Canada, while Brazil and Mexico declined.
Regarding its performance in China, the group said the market remained a ‘challenging macroenomic environment’. The firm noted ‘soft consumer demand’ during the summer and into the Mid-Autumn Festival.
Inventory adjustments also contributed to the sales drop in China, alongside ‘depressed’ Cognac sales. On a positive note, Pernod reported growth for premium brands, particularly Jameson.
The total Asia and rest-of-the-world region posted a drop of 7% to €991m (US$1.15bn), including declines in South Korea and Taiwan.
India posted a 3% rise with demand in Maharashtra affected by the state’s excise policy changes, while Japan recorded ‘strong growth’.
Africa and the Middle East also posted ‘strong results’, led by Ballantine’s and Chivas Regal in Turkey, and Martell in South Africa.
Europe was down by 4% to €752m (US$876m), with ‘modest’ decreases in France and the UK, while Germany’s decline rate eased and Spain’s performance stabilised. Within the region, the group spotlighted strong sales of Kahlúa.
GTR sales to recover next year
Global travel retail (GTR) sales plunged by 15% due to a ‘weak’ Asia market, notably in South Korea.
The group expects GTR sales to return to growth in its 2026 full year, with Cognac sales in China duty free expected to resume from the second quarter (October to December 2025).
Major Cognac producers were impacted by China’s anti-dumping investigation into EU brandy imports, which led to a suspension of Cognac sales in China’s travel retail. The investigation concluded in July this year.
Martell is set to launch limited edition GTR-exclusive products to celebrate Chinese New Year 2026, which will mark the Year of the Horse.
In terms of Pernod’s portfolio performance, the group’s strategic international brands declined by 9%, largely due to Martell in China, Ballantine’s whisky in South Korea travel retail, and Royal Salute whisky in Taiwan.
Meanwhile, Jameson and Absolut were impacted in the US by inventory adjustments.
The firm’s strategic local brands also decreased by 4%, with declines for Seagram’s whisky line. On the other hand, Olmeca Tequila and Kahlúa showed ‘solid momentum’, and Royal Stag whisky was in growth.
Speciality brands fell by 5% due to the US but Bumbu rum, Código Tequila and Del Maguey mezcal had ‘good results’.
The ready-to-drink portfolio rose by 10%.
Full-year outlook
For fiscal 2026, Pernod Ricard expects ‘improving trends’ in organic sales, skewed towards the second half of its financial year (January to June).
The group said it would work to defend its organic operating margin through ‘strict cost control’ and operational efficiencies over the next four years, with the latter totalling €1bn (US$1.16bn).
In the medium term (FY2027 to FY2029), the company expects organic sales to rise between 3% and 6% annually.
Fellow French company LVMH, owner of Hennessy Cognac, reported a 12% decline in spirits sales for the first nine months of 2025.
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