Pernod Ricard’s Spirits Lose Their Kick

Pernod Ricard’s Spirits Lose Their Kick

Mark Nichols

Thu, August 27, 2026 at 5:41 PM GMT+3 4 min read

THE GIST

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Pernod Ricard sells the good stuff. The problem is that two of its biggest drinking buddies, the U.S. and China, are not ordering another round.

WHAT HAPPENED

Pernod Ricard reported a rough year, with profit and sales both moving in the wrong direction.

The French owner of Absolut vodka, Ballantine's, Beefeater, Martell and Jameson said net profit attributable to shareholders fell 26% to €1.203 billion (about $1.4 billion) for the year ended June 30.

Net sales dropped 14.2% on a reported basis to €9.404 billion. On an organic basis, sales fell 3.9%, marking another year of decline for one of the world's biggest spirits groups.

Profit from recurring operations fell 5.2% organically to about €2.42 billion, while the operating margin narrowed to 25.8%. The company said reported numbers were hit by a €114 million negative impact from brand disposals and a €268 million currency headwind, mainly linked to the US dollar, Turkish lira and Indian rupee.

The big problems were familiar. Sales in the US fell 14%, while China dropped 19%. That hurt because both markets matter heavily for premium spirits, especially cognac and higher-end brands.

By region, Asia and the rest of the world generated €3.920 billion of revenue, down 15% on a reported basis. The Americas fell 18% to €2.584 billion. Europe declined 9% to €2.900 billion.

Brand performance was mixed but mostly bruised. Martell fell 12%, Jameson dropped 3%, Absolut slipped 2%, Havana Club declined 20% and Malibu fell 7%. Ready-to-drink products were a brighter spot, rising 12%, while India grew 7% and remained one of the few markets with real momentum.

Investors did not enjoy the taste. Pernod shares fell around 5% to 6% after the update, trading near €64 and close to recent lows.

WHY IT MATTERS

Pernod Ricard's problem is not that people have suddenly forgotten how to drink. It is that the expensive-drinks cycle has lost its fizz in the markets that used to make the numbers sparkle.

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The US spirits market is stuck in a hangover. Consumer confidence is weak, premium bottles are moving more slowly and retailers are adjusting inventories. That is bad news for a company that depends on brands commanding higher prices rather than just shifting volume.

China is even more painful. Prestige categories, especially cognac, have been under pressure as weak sentiment and a tough macro backdrop hit gifting, banqueting and luxury consumption. Martell's decline shows how exposed Pernod remains to that old China premium-spirits engine.

That is why the outlook cut matters. Pernod still has a medium-term sales growth target range of 3% to 6% for fiscal 2027 to 2029, but it now expects to be closer to the lower end. That is corporate language for: the recovery is coming, but do not pour anything too generous yet.

The company is not standing still. It is pushing a €1 billion efficiency program between fiscal 2026 and 2028, while keeping investment in marketing and brand support. It also plans around €700 million of strategic investments in the current year.

That balance is important. Cutting advertising too hard would protect margins today but weaken brands tomorrow. Pernod needs Jameson, Absolut, Martell, Chivas and its newer brands to stay visible while demand is soft.

The debt picture adds pressure. Pernod wants to bring net debt to EBITDA below 3 times by fiscal 2029, while investors are already questioning whether the company can keep funding growth, restructuring, marketing and shareholder returns at the same time.

There are bright spots. India is growing, premiumization there is still working and the country has overtaken China as Pernod's second-largest market. Management is even discussing a possible IPO of the Indian business, which could unlock value if public markets give that growth story a higher rating than the sluggish global group.

But for now, India is not big enough to make the US and China disappear.

WHAT'S NEXT

Pernod expects organic sales in the current fiscal year to be broadly stable, with further weakness in the US and China offset by growth elsewhere, especially India.

The next tests are whether US inventories normalize, whether China shows any lift around key festive periods and whether brands like Martell, Absolut and Jameson can return to growth without heavy discounting.

Investors will also watch the balance sheet, the €1 billion efficiency plan, dividend policy and any move toward listing the Indian business. Pernod does not need a miracle. It needs the world's premium-drinks drinkers to start acting premium again.