Pernod Ricard Saw a Decline in Sales and Profits
French drinks company Pernod Ricard reported a slump in profits and sales today across all five of its “priority markets” in the first half of the fiscal year, according to a Reuters report. And the main driver of this bad news was said to be weakening sales across all of its spirits categories, particularly in the U.S. and China.
Pernod Ricard is the owner of some major distilleries and spirits brands, including Absolut Vodka, Jameson Irish Whiskey, Martell Cognac, and the Glenlivet single malt scotch. Despite the negative figures, the company maintained a sense of optimism about the future. But first let’s get to the bad news: Pernod Ricard reported a nearly 6 percent drop in organic sales over the six months leading up to December, and a 7.5 percent decline in organic profit over the same period of time. As reported at The Spirits Business, Martell sales were down 17 percent, mostly because of the Cognac being removed from travel retail amidst ongoing disputes and new tariffs. Luxury blended scotch brand Royal Salute saw a 19 percent drop, Jameson dipped by 7 percent, and Absolut, Beefeater Gin, and the Glenlivet all slumped by 3 percent each.
As mentioned before, two key markets were largely responsible for the decline: The U.S., which was down by 15 percent, and China, which nearly doubled that with a 28 percent tumble. “The declines in the U.S. and China are amplified by inventory adjustments, and our first half had a negative impact from currency and perimeter effects,” said CEO Alexandre Ricard on an earnings call. “We have indeed been hit by the trade tariffs on one side, by some COGS (cost of goods sold) inflation, particularly on aged liquids which have been partially mitigated through some strong operational efficiency levers.”
Despite this news, Pernod Ricard is maintaining a positive outlook about how the next few years will play out. According to Reuters, the company’s performance was, overall, in line with expectations, and duty free sales and the Indian market showed signs of improvement, leading to a forecast of 3 to 6 percent growth by 2029. On the earnings call, Ricard pointed to other markets with positive growth as well, including Ireland, the “Nordics,” Canada, and Japan, as well as Turkey which saw a 27 percent increase in sales. The company’s agave spirits lineup in particular showed strength—Codigo 1530 tequila was up by nearly 40 percent and Del Maguey mezcal by 20 percent—and the RTD sector saw more than 10 percent growth. “We are constantly or continuously adapting our strategies to really go capture growth where it is, and to really address our consumer needs that are constantly, as well, evolving,” said Ricard.
