Pernod Ricard, the world’s second-largest spirits group, has reported a 3.9% decline in annual sales to £8.1 billion for the year ending June 30, marking its third consecutive year of declining revenue. The company attributed the downturn primarily to significant sales drops in the United States and China, which it said would continue to weigh on growth prospects for years.
Sales in the US fell by 14%, driven by a slowdown in the spirits market amid economic moderation and subdued consumer confidence. Alexandre Ricard, Pernod Ricard’s chief executive, stated that the company does not expect to see a return to growth in the US before 2029. This outlook aligns with predictions from Diageo, the world’s largest drinks group, which has also flagged softness in the American market. Meanwhile, sales in China fell 19%, reflecting ongoing challenges in one of Pernod Ricard’s key markets.
Pernod Ricard cited broader cost-of-living pressures and growing health consciousness among consumers as factors contributing to a multi-year slump in the spirits industry. The company also noted that its current financial year, which began in July, is expected to show broadly stable organic net sales, with continued difficulties in achieving growth in the US and China during the first quarter.
Reflecting these trends, Pernod lowered its annual sales growth forecast to the lower end of its 3% to 6% range for the coming years. Ricard highlighted the company’s diverse geographic reach as a potential buffer against market softness, suggesting that growth might be supported outside the US and China despite headwinds in these key territories.
The group, known for brands such as Absolut Vodka, Jameson Irish whiskey, Havana Club, Malibu, and Beefeater, had been exploring a £22 billion merger with Brown-Forman, the US family-owned maker of Jack Daniel’s whiskey, but talks were terminated in April. Pernod Ricard plans to adapt to the changing market landscape through ventures like expanding its ready-to-drink canned and tinned beverage range, targeting younger consumers who are increasingly favoring convenience.
Shares in Pernod Ricard fell 4.6% following the earnings announcement, extending a decline of more than one-third over the past year. Analysts acknowledged the tough market conditions, with James Edwardes Jones of RBC Capital Markets describing the financial results as “just about OK” despite the challenges in North America and China.
The spirits sector as a whole is experiencing a prolonged period of subdued demand, leading some companies to restructure, divest assets, and pursue cost-cutting measures amid sliding valuations. Pernod Ricard’s outlook underscores ongoing uncertainty but also signals the company’s strategy to navigate evolving consumer preferences and economic environments in key global markets.