China slowdown and US challenges weigh on Pernod Ricard

By Jo Gilbert

Published: 17 October, 2024

Pernod Ricard, the world’s second-largest spirits group, reported revenue slump of 8.5% to €2.783 billion and a 5.9% organic decline for the first quarter of fiscal year 2025, as a challenging macroeconomic environment in China and ongoing inventory adjustments in the US contributed to an underwhelming performance.

The French company, known for brands such as Jameson whiskey, Martell Cognac and Mumm Champagne, saw sales in China plummet by 26% during the Q1 period. This steep decline was driven by weakened consumer sentiment in the country, further exacerbated by anti-dumping duties imposed by China on European brandy imports. Pernod Ricard, which generates about 10% of its revenue from China, expressed concern about the full-year outlook in the region but remains focused on mitigating the impact of the new tariffs.

The US market also struggled. Sales fell 10% as retailers and wholesalers continued to trim high-end stock levels, contributing to softer-than-expected performance across several categories. Despite these setbacks, the company noted that Jameson whiskey held steady relative to competitors, and significant marketing investments are planned ahead of the festive season.

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On a positive note, Pernod Ricard saw bright spots in Canada, Brazil and travel retail markets across the Americas and Europe, though the results did not specifically mention the UK. Its ready-to-drink (RTD) segment continued to expand rapidly, benefiting from the strong momentum of brands like Absolut and newly acquired labels.

Looking ahead, the group reiterated confidence in its medium-term strategy, aiming for organic sales growth of 4% to 7% annually. It is still expecting full-year organic net sales to return to growth for FY25.

The company also remains optimistic about long-term growth despite ongoing global headwinds, citing its diversified portfolio and broad geographic footprint as key strengths in navigating an uncertain landscape.

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