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Geopolitical Risk · Pernod Ricard · Sales Decline · Spirits Industry
French distiller Pernod Ricard now forecasts a 3%-4% decline in net sales for its full fiscal year 2026, reversing previous expectations, as the U.S. and Israel's war on Iran severely impacts airport retail and existing market challenges persist in the U.S. and China.
The conflict in the Persian Gulf has led to significant travel disruption, causing Pernod's travel-retail division to be "entirely closed down" last month in directly affected countries, according to finance chief Helene de Tissot. This geopolitical impact compounds existing difficulties, including a 12% year-on-year drop in U.S. group sales during the quarter through March due to health-conscious consumers.
In China, revenue fell 7% in the quarter and is nearly a quarter down year-to-date, attributed to a crackdown on drink at Communist Party events and low consumer confidence. Pernod Ricard reported group sales of 1.945 billion euros ($2.30 billion) for the third quarter, a 15% decrease from the prior year, though organic sales saw a modest 0.1% increase.
The company plans to reduce strategic investments to focus on cash generation. Amid these headwinds, Pernod Ricard is continuing merger talks with Brown-Forman, a move analysts like AlphaValue's Theodore Duval-Segard suggest could help overcome tough sales trends, despite potential complexities in structuring a deal between the family-dominated groups.
India remains a positive outlier, with revenue growth picking up to 11% over the quarter.
Pernod Ricard Forecasts Sales Decline Amid Global Headwinds(current)
