Pernod Ricard first quarter sales fall less-than-expected, cautious optimism on China

Pernod Ricard, the world's second-largest spirits manufacturer, disclosed on Thursday that its sales for the first quarter of the 2027 fiscal year declined slightly by 0.9%, which was less than the anticipated 1.7% drop according to analyst projections. The decrease was primarily attributed to weakened demand and excess inventory in China and the United States.

However, the company expressed cautious optimism regarding China's market, citing strong consumer interest in the initial months leading up to the Chinese Mid-Autumn Festival.

The company, renowned for brands such as Martell cognac and Absolut vodka, reaffirmed its forecast for stable net sales throughout the fiscal year that commenced on July 1. Pernod Ricard's sales experienced a notable 10% decline in the United States and a more significant 25% decrease in China. In contrast, sales spiked by 19% in India.

Finance Director Mauve Croizat informed analysts that inventory adjustments in China and the US were likely to persist throughout the year, with consumers in China shifting towards private consumption rather than social drinking. Meanwhile, in India, Pernod Ricard is preparing for potential measures towards an initial public offering (IPO), subject to board approval. The company stated that the decision to proceed with an IPO would depend on market conditions and could take several months to execute.

Croizat emphasized Pernod Ricard's commitment to maintaining its organic operating margin through strict cost control measures. The company also reiterated its expectation for sales growth at the conservative end of its 3% to 6% growth target range by 2029, reflecting the ongoing downturn affecting global spirits manufacturers.