Despite struggles in the US and China, Pernod believes it is still on track for moderate sales growth this fiscal year.

The drinks giant’s sales for Q125 – on the basis of a June-June fiscal year – totalled €2,783m, an organic decline of -5.9% and -8.5% reported. Pernod attributed this slow start to a sharp 26% decline in China; continuing macroeconomic weakness is impacting consumer sentiment.

Pernod saw weak consumer demand over the summer and into the Mid-Autumn Festival, as net sales declined on Martell Cognac and Scotch, while premium brands including Jameson, Beefeater, Kahlúa and Olmeca grew strongly.

Pernod said it expect to see a full-year decline in China based on current forecast, and added: “Further to the announcement by MOFCOM for the implementation of temporary duty deposits effective from Friday 11 October, actions are being taken to mitigate the impact on the group performance.”

Decline in the US was attributed to an underlying sell-out performance, amplified by inventory adjustments. By regional sales growth, the Americas was down 5%, with the entire US down 10%.

Pernod noted the spirits market there is continuing to normalise, and it had strong activation plans for the region. Canda saw growth especially in the RTD category, while Mexico’s declining tourism contributed to softening on-trade sales.

GTR

Global Travel Retail saw a 3% rise in sales, with strong growth in all regions except Asia. Its quarterly sales result was softer than previously expected as the weakness in China continued to affect Asia Pacific Travel Retail.

Absolut, Jameson and Ballantine’s were stand out brands for the wine and spirits seller, though weak consumer sentiment affected Chinese travelers’ spend, and is expected to persist for the full year.

Europe

 Markets in Europe endured adverse weather conditions over the summer, though Pernod Ricard noted its broad geographic base allowed it to deliver strong performances in several markets across all the regions, especially: Japan; Canada; Poland; Brazil; Turkey; Nigeria and Travel Retail in Americas and Europe.

Excluding Russia, Pernod saw 1% sales growth regionally (-3% including Russia), gaining market share in France, Germany and Poland.

APAC

Pernod also gained market share and continued strong growth in Japan, while declining in Korea, as the macroeconomic environment remained weak.
Strong results were seen in Africa and Middle East, notably in Turkey with Chivas Regal and Ballantine’s.

In India, where the underlying growth is strong, Pernod Ricard faced technical sales phasing, expected to fully reverse in Q2, though did see a 2% growth in sales, as the market continued to enjoy dynamic consumer fundamentals, performing ahead of the industry.

As has been the case recently, whisky performed admirably in the region. For Pernod Ricard, Royal Stag, Blenders Pride, Jameson, all grew double digits.

Outlook

Pernod noted its outlook for the rest of the year was still positive, and that it would leverage it diversified portfolio, and balanced footprint to aim for the upper end of 4-7% sales growth within its medium-term financial framework, as volumes continued to recover.

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