Pernod Ricard SA’s sales fell less than expected last quarter as growth in India helped cushion persistent weakness in the US and China. Organic net sales fell 0.9% from a year earlier, the maker of Absolut vodka and Martell cognac said in a statement Thursday, less than the 1.24% decline estimated by analysts. Pernod stuck with its mid-term forecast.
Spirits makers are struggling in some of their biggest markets as consumers moderate their drinking and cost-of-living pressures push shoppers to cheaper brands. Sales in India were a bright spot for Pernod, jumping 19%, even as a slump in the US and China continued. The company said its preparing for a potential listing in India, though a decision on an initial public offering for its business there would still need board approval.
Pernod shares have fallen 21% so far this year in Paris, compared with an 8.5% gain for rival Diageo Plc. The war in the Middle East and higher costs associated with US President Donald Trump’s tariff policies have disrupted the industry, while demand in China has been depressed after the government cracked down on gift-giving by officials, which previously buoyed sales of premium spirits. Pernod expressed cautious optimism about improvement in China.
The distiller pointed to a Mid-Autumn Festival campaign it’s rolling out to drive sales of Martell cognac, especially in travel retail, which has been affected by the Mideast conflict. China sales dropped 25% from a year earlier in Pernod’s fiscal first quarter. The French spirits maker had flagged a weak start to the year due to the impact of destocking in the US, where retailers, wholesalers and distributors reduce their inventory levels.
While sales declined 10%, US consumers increasingly picked up Pernod’s Malibu rum and its Skrewball flavored whiskey, the company said, especially new flavors including Malibu Pink and Screwball Peanut Butter & Jelly. Although some analysts had suggested Europe would stabilize, the region continued to soften, with sales falling 6%. Germany in particular showed steeper declines.
Still, Pernod stuck with its forecast to reach the low end of its targeted range of 3% to 6% growth in organic net sales in the medium term. It expects sales to be roughly stable this year.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing