By Dominique Vidalon and Emma Rumney
PARIS (Reuters) -French spirits maker Pernod Ricard endured steep declines in all but one of its key markets in the first quarter, it said on Thursday, as global tariffs and weak economies further pressure the embattled spirits sector.
Pernod, the world’s second-biggest Western spirits group behind Diageo, said it still expected sales to improve in the current fiscal year to June 30, 2026, while reporting a slightly worse-than-expected 7.6% fall in first-quarter sales, blaming weak consumer demand and destocking in China and the United States.
Pernod said it continued to expect sales trends to improve primarily in the second half of the year, boosted by higher sales of cognac in duty-free stores and an easier base of comparison against a year ago.
It also expects less pronounced declines in the U.S. and China, where sales fell 27% and 16%, respectively, CEO Alexandre Ricard told Reuters in an interview.
“You should see that minus 27% improve, albeit remain negative,” he said of China. “And I would say basically almost the same thing for the U.S.”
Shares in the company, which had already braced the market for a tough quarter, were up 1.2% at 0911 GMT.
Bernstein analyst Trevor Stirling said that the market was likely relieved that underlying demand from consumers in China and the U.S. was “not quite as grim as the headline numbers are”.
All spirits companies have suffered as a sales boom seen after the COVID-19 pandemic went into reverse, more recently exacerbated by tariffs on cognac imports in China and on EU goods entering the United States.
Some investors believe a societal shift towards lower alcohol consumption could drive long-term declines, but spirits executives say tough economic conditions rather than fundamental changes in how much people drink are behind current trends.
Pernod said it was catching up with rivals in the U.S., while in China, sales around the Mid-Autumn Festival, albeit soft, did indicate a better underlying performance than in the July-September quarter, Chief Financial Officer Helene De Tissot told investors.
Pernod also counts on India, its No.2 market, to boost performance later in the year as the impact of July’s steep rise in excise tax in the second-most populous state of Maharashtra is digested.
The company has launched a restructuring plan to cut costs. It said in February it hopes to save approximately 1 billion euros in efficiencies between its 2026 and 2029 financial years.
($1 = 0.8579 euros)
(Reporting by Dominique Vidalon; Editing by Ronojoy Mazumdar and Tomasz Janowski)
