Last week Pernod Ricard and Brown-Forman confirmed they were in discussions over a potential merger: although emphasized that no decisions had been taken.
The potential combination would be huge: bringing together gloabl power brands such as Jameson, Beefeater, Absolut, Jack Daniels and Glendronach.
But there’s another spirits powerhouse in the market: Diageo.
The battle of the spirits giants
Diageo’s brands include Johnnie Walker, Guinness stout, Smirnoff vodka, Baileys liqueur, Captain Morgan rum and many others.
And the London-headquartered company remains the king of the market.
“Combined, we estimate that Pernod Ricard and Brown-Forman have a market cap of around €26bn ($30bn), which is still smaller than Diageo which currently has a market cap of around €35bn ($40bn)," said Verushka Shetty, analyst at Morningstar.
The tie-up of Pernod Ricard and Brown-Forman, however, would still create a sizeable challenger to Diageo’s dominance: and certainly one much bigger and stronger than either company alone.
Pernod Ricard and Brown-Forman: Does a merger make sense?
Spirits benefited from the pandemic: with little else to spend their money on, consumers turned to premium spirits as little luxuries at home. The cocktail craze and rise in at-home bartending also helped the market surge.
But the boom was shorter lived than many spirits giants hoped (as Diageo knows only too well).
Tariffs and supply chain woes have since made the category even more difficult. All three players have seen sales and share prices fall.
For Pernod Ricard and Brown-Forman, the answer could be economies of scale. While both companies play in spirits, their focuses are largely different (Brown-Forman’s strength is in American whiskey while Pernod Ricard has a balanced global portfolio).
US market: A double-edged sword
The US market is key for spirits and many of the major brands in the world.
It remains a huge market: expected to reach around $140bn by 2031. And yet this market is under pressure.
Diageo, for example, saw its H1 sales for the US fall 7%: representing a problem when North America makes up 40% of its market.
There’s many challenges: traditionally reliable trends such as premiumisation are under pressure; tequila is down, and tariffs present an ongoing headache.
But the biggest problem, according to CEO Dave Lewis, is the economic situation: people simply have less money to spend. That’s putting a lot of pressure on the category.
Brown-Forman, meanwhile, is also feeling the pinch. Net sales in the US declined 8% over the last nine months, with CEO Lawson Whiting noting a ‘challenging operating environment.’
But its core whisky products, such as Jack Daniel’s and various line extensions, remain relatively strong (net sales up 2%).
Pernod Ricard, meanwhile, is a relatively small player in the US space: with the market representing around 19% of sales (this market was down 6% in 2025). And despite the downturn in the US market, Brown-Forman’s whiskey portfolio shows there’s still potential for the market.
Spirits, additionally, are often considered to be largely cyclical: with optimism that demand will rise again (others, however, argue that the category’s woes are now more structural). How this plays out remains to be seen: but a geographically diversified portfolio would be an advantage to both players.
“The majority of Brown-Forman’s operating profit stems from the US, meaning the deal would increase Pernod’s US exposure, which currently lags Diageo,” said Shetty of Morningstar.
“However, there is uncertainty about when headwinds in the US will abate and about future demand trends in spirits.”
Will Pernod Ricard and Brown Forman combine?
Ultimately, both companies still have multiple generations of founding family members involved. And any deal will have to satisfy them as well as the balance sheet.
Kevin Grundy, analyst for BNP Paribas Securities Corp, sees the deal as unlikely: noting that ‘the Brown family has long had voting control and consistently dispelled any notion of a potential sale of the company’.
And yet Brown-Forman, like Pernod, has confirmed that talks are in place: meaning it’s still all to play for.
Meanwhile, the French government is understood to be watching the potential deal closely as well.
As is the rest of the beverage world.
