Pernod Ricard's sales in the first quarter were affected by the United States and China because of stock adjustments and the effects of economic difficulties.
The company behind Absolut Vodka announced today (October 16) that organic net sales fell by 7.6%, while total sales dropped 14.3% to €2.38 billion ($2.77 billion), figures that did not meet certain analysts' forecasts.
Sales were "more dismal than anticipated," wrote Trevor Stirling from Bernstein in a research note sent to clients.
Bernstein analysts predicted a 6.2% decrease in organic sales, whereas the general expectation was for a 7.1% drop.
Pernod's market in the Americas experienced a 12% drop in organic sales, reaching €641 million, which exceeded Bernstein's predicted 5 decline by more than double. Stirling noted that the performance in the United States was "a significant disappointment," with sales declining by 16%.
In the results statement, the group expressed being "encouraged" by continuous progress in sales performance within the United States, although they noted that the spirits market remained "slow."
US sales were also affected by inventory adjustments, which the Jameson whiskey distiller stated it had "anticipated".
"The market gap is decreasing and sell-out patterns are showing improvement; however, as long as volumes continue to drop, there remains a risk of additional de-stocking," said Stirling from Bernstein.
During an investor conference this morning, CFO Hélène de Tissot stated, "It's still too soon to be very specific about what to anticipate in the US since we're only just beginning the season at this moment."
She said: "As you are aware, our main goal is to continue enhancing our sell-out trend, which has been steadily showing progress for several months now. However, there is also the effect on inventory adjustments."
Those changes in the United States are expected to influence the overall direction for the entire year, she stated.
In China, the organic sales of Altos Tequila decreased by 27%. The group's Asia and Rest of World region experienced a 7% drop, reaching €991m.
Sales in China continue to encounter a "challenging macroeconomic climate," the company stated. During the first quarter, it observed "weak" demand from consumers during the summer and the Mid-Autumn Festival period, with the on-trade sector being particularly impacted.
The group stated that it continues to be "cautious about the demand environment" as the Chinese New Year draws near.
Pernod's international travel retail division is still experiencing reductions, with organic sales dropping by 15% in the first quarter, caused by the halt of duty-free sales in China after the Cognac anti-dumping inquiry, along with poor performance in GTR outside of China.
The company expects the travel retail sector to regain growth throughout the entire year of 2026. Sales in China GTR are projected to restart in the second quarter.
De Tissot informed analysts today that the second half of the year would be more robust than the first half, with the restart of Martell Cognac sales in Chinese duty-free stores being one of several elements that would contribute to improved results.
When questioned by Barclays analyst Laurence Whyatt if the company expected travel retail sales for Martell in China to rebound to levels seen in the first quarter of 2025, de Tissot mentioned there was "some connection" between domestic demand and travel retail demand for the brand in China.
The consumer demand within China's domestic market is quite weak... so I would suggest it's prudent to consider that the demand in China's travel retail might be somewhat lower than it was a year ago," she stated. "However, we will find out clearly in a few months.
Meeting with analysts after announcing its annual resultsin August, de Tissot stated the group anticipated observing "some positive developments in China towards stabilization".
She stated at that moment: "So when you examine the blocks and the positive trends for the group throughout the year, I would emphasize China and travel retail within those favorable categories."
"Pernod Ricard's sales affected by weakness in the US, China" was originally created and published byJust Drinks, a Healthy Survival owned brand.
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