The French spirit giant saw sales in Q3 improve compared to H1, with sales improving in all regions. But that still leaves the company with a 4.4% organic decline for the year-to-date: as spirits giants continue to battle declining sales.
Pernod Ricard confirmed that discussions are still ongoing with Brown-Forman to create an international spirits giant: but did not comment further on the potential tie-up (nor on reports that Sazerac is also pursuing a deal with Brown-Forman).
Iran conflict impact
While Pernod Ricard says the impact of the Iran conflict is currently limited to a few key areas: the war will still hit sales.
Pernod Ricard sees around 2% of group sales come from the Middle East. More important, however, is its travel retail footprint: with Dubai and other Middle Eastern hubs a critical pinpoint for global travel.
With air travel suspended, so were travel retail sales in the region.
Travel retail is a strong channel for Pernod Ricard: up 11% over q3 and up 2% over the year-to-date.
However, the company now predicts a decline for the channel in FY26, as a result of the disruption in March.
And the cost of energy has also hit the company.
Pernod Ricard Q3
- Americas: -8%
- Asia ROW: +6% (with India up 11%)
- China: -7%
- Europe: +1%
- GTR: +11% (but with travel disruption yet to be accounted for)
Premium struggles
With brands such as Jameson Irish whiskey, Absolut vodka and Mumm, Pernod Ricard’s spirits portfolio could be vulnerable if consumers start trading down from premium spirits.
However, Helene de Tissot, EVP and tech, says that the impact remains limited to global travel retail and energy costs.
Despite concerns about inflation hitting consumer spending, she says the company has not seen signs of this yet.
In the US, for example, “I don’t think, right now, there’s a significant or tangible impact in terms of consumer confidence because of the conflict: although I don’t think it’s helping anyone in terms of optimism” she said.
But the Iran conflict is just one element for companies such as Pernod Ricard.
The alcohol industry is under pressure: with consumers drinking less and spending less on booze.
Pernod Ricard now expects to see FY organic sales decline 3-4%.
“Judging by this guidance, we can’t ignore that the spirits category is best by challenges,” said James Edwardes Jones, equity analyst at RBC Insight.
The uncertainty of tariffs in both China and the US also continue to put pressure on Pernod Ricard.
