Pernod Ricard Faces 27% Sales Decline in China as Market Challenges Deepen

French spirits group Pernod Ricard started its fiscal year with a challenging first quarter. From July to September, the company’s revenue fell 7.6% organically and 14.3% on a reported basis, reaching €2.38 billion (US$2.77bn). The decline followed a 3% drop for the previous fiscal year.

The slowdown was especially sharp in China and the US, where Pernod Ricard sales dropped by 27% and 16%, respectively. The company attributed part of this dip in the US to inventory adjustments, which weighed on distributor demand.

Americas Region Sees Mixed Results

In the Americas, Pernod Ricard sales declined by 12% to €641 million (US$747m). Canada managed to deliver strong growth, but Brazil and Mexico both reported contractions. The US market remained under pressure, primarily due to softening consumer spending and channel restocking.

China’s Market Puts Pressure on Pernod Ricard Sales

China continues to be a tough environment for the group. The company cited a “challenging macroeconomic context” and weak consumer demand during the summer and Mid-Autumn Festival. Inventory corrections and declining Cognac sales—especially Martell—amplified the downturn.

However, not all the news was negative. Pernod Ricard highlighted solid growth among its premium brands, particularly Jameson, which continues to expand globally.

Regional Highlights: Asia, Europe, and Emerging Markets

Across Asia and the rest of the world, Pernod Ricard sales fell 7% to €991 million (US$1.15bn). South Korea and Taiwan underperformed, while India grew 3%, despite regulatory headwinds in Maharashtra. Japan recorded “strong growth,” and Africa and the Middle East achieved “excellent results,” led by Ballantine’s and Chivas Regal in Turkey, and Martell in South Africa.

In Europe, revenue dipped 4% to €752 million (US$876m). France and the UK saw modest declines, while Germany’s sales contraction slowed, and Spain’s performance stabilized. Within the region, Kahlúa stood out for its robust growth.

Global Travel Retail: A Temporary Setback

The global travel retail (GTR) division recorded a 15% decline due to weak demand in Asia, particularly South Korea. Pernod Ricard expects this segment to rebound in fiscal 2026, with Cognac sales in China’s duty-free market projected to recover from October to December 2025.

The company also confirmed that Cognac producers, including Martell, were affected by China’s anti-dumping probe into EU brandy imports, which temporarily halted Cognac sales in duty-free stores. With the investigation now concluded, Martell plans to release limited-edition GTR-exclusive bottles for the 2026 Lunar New Year (Year of the Horse).

Brand Performance Across Categories

Pernod Ricard’s strategic international brands dropped 9%, mainly due to Martell’s decline in China, Ballantine’s in Korean travel retail, and Royal Salute in Taiwan. Jameson and Absolut also took hits in the US from inventory adjustments.

The company’s strategic local brands slipped 4%, driven by Seagram’s whiskies, though Olmeca Tequila, Kahlúa, and Royal Stag maintained momentum. Specialty brands fell 5%, largely because of the US slowdown, but Bumbu rum, Código Tequila, and Del Maguey mezcal delivered positive results.

Meanwhile, the ready-to-drink portfolio grew by a solid 10%, signaling continued demand for convenient formats.

Outlook: Gradual Recovery Expected

Looking ahead to fiscal 2026, Pernod Ricard expects sales to improve, particularly in the second half of the year (January–June). The company plans to protect its operating margin through strict cost management and operational efficiencies totaling €1 billion (US$1.16bn) over four years.

From FY2027 to FY2029, the group forecasts organic sales growth between 3% and 6% annually.

In comparison, fellow French luxury group LVMH, owner of Hennessy Cognac, reported a 12% drop in spirits revenue for the first nine months of 2025.

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Source of information

The Spirits Business Article — Pernod posts 27% Q1 drop in China, written by Miona Madsen

The image of the article is courtesy of ©narong27 via Canva.com