Little cheer for Pernod as US, Chinese quarterly sales slide

By Dominique Vidalon and Emma Rumney

PARIS (Reuters) -French spirits maker Pernod Ricard endured steep declines in all but one of its key markets in the first quarter, it said on Thursday, as global tariffs and weak economies further pressure the embattled spirits sector.

Pernod, the world's second-biggest Western spirits group behind Diageo, said it still expected sales to improve in the current fiscal year to June 30, 2026, while reporting a well-flagged 7.6% fall in first-quarter sales, blaming weak consumer demand and destocking in China and the United States.

Pernod said it continued to expect the improving sales trends to be skewed towards the second half of the year, boosted by higher sales of cognac in duty-free stores and an easier base of comparison against a year ago. 

However, it remained cautious on the key Chinese market ahead of the festive Chinese New Year season that starts in mid-February.

The owner of Martell cognac, Mumm champagne and Absolut vodka brands reported sales of 2.384 billion euros ($2.78 billion) from July to September, marking a deeper like-for-like decline than a 7.1% drop forecast by analysts in a company-compiled poll.

Pernod Ricard's fiscal year started on July 1.

Edward Mundy, analyst at Jefferies, said Pernod's first quarter showed an "absence of clear green shoots" that might disappoint investors. 

The company's shares were up 0.6% by 0715 GMT. 

Pernod Ricard and its rivals have suffered amid falling sales and tariff uncertainty in the key markets of China and the United States. A deal removing steep tariffs on European cognac exports to China was reached in July, while the U.S. and European Union also agreed a 15% tariff rate that month. 

Even before tariffs, spirits companies were grappling with a widespread downturn as a sales boom seen after the COVID-19 pandemic went into reverse.

Some investors have worried that a societal shift towards lower alcohol consumption could drive long-term declines, but spirits executives say current trends are more driven by economic difficulties than by fundamental changes in how much people drink. 

In the United States, where tariff uncertainty led distributors to boost inventory levels at the end of fiscal year 2025, adjustments continued in the quarter, with sales falling 16%.

In China, sales fell 27% as consumer demand stayed soft over the summer and into the Mid-Autumn Festival. 

In India, another key market for Pernod, sales rose 3% despite adverse changes in excise tax in the nation's second-most populous state of Maharashtra, in July. 

Pernod - which has launched a restructuring plan to cut costs - reiterated its guidance for between 3% and 6% annual organic sales growth for 2027-2029, along with annual organic margin expansion.

($1 = 0.8579 euros)

(Reporting by Dominique Vidalon; Editing by Ronojoy Mazumdar and Tomasz Janowski)