Pernod Ricard’s First-Half Sales Slip Limited by Improved Second Quarter

Why It Matters

The results highlight the resilience of Pernod Ricard’s diversification strategy amid a prolonged global spirits downturn, and signal that cost‑saving initiatives will be crucial for maintaining growth targets.

Key Takeaways

• First-half sales fell across all five priority markets.
• Q2 showed modest recovery driven by India and duty‑free.
• Organic operating profit down 7.5%, 18.7% including FX.
• Company targets €1 bn savings by 2029 via restructuring.
• Shares up 3.5% after results, still down 22% YoY.

Pulse Analysis

The spirits sector continues to wrestle with a multiyear demand slump, driven by tighter consumer wallets in the United States and a sluggish Chinese economy. Pernod Ricard’s first‑half performance mirrors this backdrop, with sales slipping across its core markets and organic operating profit contracting sharply. Yet the company’s ability to extract a modest lift in the second quarter—thanks largely to expanding Indian consumption and robust duty‑free sales—demonstrates the value of geographic diversification when traditional markets falter.

To counteract margin pressure, Pernod Ricard has accelerated a restructuring plan aimed at €1 billion of savings by 2029. The initiative includes workforce reductions, inventory optimization, and a shift toward more affordable packaging, such as smaller‑size bottles, to appeal to price‑sensitive consumers. While rumors of an Indian IPO surfaced, the firm clarified that no listing is planned, preferring to retain direct control over its fastest‑growing market. These moves underscore a proactive stance to protect profitability while navigating volatile foreign‑exchange environments.

Looking ahead, the company’s reaffirmed 3‑6% sales‑growth guidance through 2029 signals confidence that its strategic adjustments will offset broader market headwinds. Investor sentiment reflected this optimism, with shares edging higher post‑announcement despite a 22% decline over the past year. Analysts view the modest Q2 rebound and cost‑saving trajectory as critical levers for sustaining momentum, positioning Pernod Ricard to capitalize on emerging opportunities as global consumer preferences evolve.

Pernod Ricard’s first-half sales slip limited by improved second quarter

By Dominique Vidalon and Emma Rumney

Paris — Pernod Ricard on Thursday reported weaker sales across all five of its priority markets in the first half of its fiscal year, and group profits dropped as foreign‑exchange swings and rising costs compounded turmoil in its US and Chinese businesses.

Still, the French liquor company’s first‑half performance was broadly in line with expectations, and showed an improvement in the second quarter as markets such as India and global duty‑free sales improved. Pernod expects to deliver better second‑half results.

The maker of Martell cognac and Absolut vodka reaffirmed guidance of between 3 % and 6 % sales growth between 2027 and 2029 despite an industry‑wide slump in demand.

Image 1: Alexandre Ricard, new chairman and CEO of Pernod Ricard, poses at the company headquarters in Paris, France. Picture: REUTERS/CHARLES PLATIAU

Pernod Ricard CEO Alexandre Ricard in Paris, France. Picture: Reuters/Charles Platiau

CEO Alexandre Ricard said Pernod can meet that range even if the US and China, where sales have dropped amid strain on US consumer wallets, destocking and a sluggish Chinese economy, grow less than 3 %.

“Beyond the US and China we have the rest of the world,” he said. The company’s shares were 3.55 % higher at 1.21 pm GMT, having fallen more than 22 % in the past 12 months.

Sales slump

Spirits companies are battling a multiyear slump in sales that has prompted valuations to slide, CEOs to exit and companies to sell assets and cut costs.

Pernod has launched a restructuring plan that targets €1 bn in savings between 2026 and 2029, which included job cuts in the first half.

Ricard said there weren’t any plans to launch an initial public offering of its Indian business. Media reports on Wednesday had said the company was reviewing a possible listing.

‘Strikingly negative’

The company is taking other steps to protect profits and drive sales, including reducing its inventories of finished goods and focusing on affordability, such as introducing smaller pack sizes.

Pernod’s organic operating profit fell 7.5 %, slightly worse than forecast, and deepened to 18.7 % on a reported basis when factors such as foreign exchange were included.

Chris Beckett, an analyst at Pernod investor Quilter Cheviot, said even that “strikingly negative” performance did not drive a decline in the share price because of the low expectations for the sector.

“It says quite a lot about where we are,” he said.