Pernod Ricard sales slump in first quarter
Pernod Ricard has suffered a disappointing start to its financial year but expects to be back on the growth track by next summer. Ron Emler reports.
In the July to September first quarter it achieved sales of €2.78 billion, an organic fall of 5.9% compared with the same period in 2023, or -8.5% in absolute terms.
In its biggest market, the US, Pernod Ricard’s sales fell by 10% as consumers continued to spend cautiously and the group made inventory adjustments. While it expects a ‘gradual’ improvement over the next nine months, much will depend on the Christmas season to which it is focusing on “strong activation plans and protecting marketing investment in our key brands”.
Asian markets also disappointed with overall sales falling by 8%. This was despite a 2% rise in India, which is now the French group’s second largest market.
In China, where extra tariffs hang over Martell Cognac, sales slumped by 25%. Scotch and Cognac were the worst affected sectors with weak demand throughout the summer and during the important mid-Autumn festival which features much family travel and gifting.
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The China sales fall was the key reason behind the 10% drop in Pernod Ricard’s Strategic International Brands category. Sales were also hit by downturns for Royal Salute in Korea and weak uptake of The Glenlivet scotch in the US.
Despite taking measures to mitigate the Cognac tariffs and continuing weakness of consumer demand, Pernod Ricard says it expects a “more significant” full year decline to next June in China than in last year.
In India, where Pernod Ricard hopes to regain its trading licence for the Delhi region, the group forecasts “solid sales growth”, which is expected to accelerate because the market “displays strong consumer fundamentals”. Sales in the first quarter were up 2% compared with 2023.
For the full year to the end of next June Pernod Ricard predicts a return to net sales growth with continuing volume recoveries. The company reiterated its medium term targets of net sales growth of between 4% and 7%.
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