French spirits group Pernod Ricard has warned that declining demand from drinkers in the United States will weigh on its sales for years to come.
The Paris-based drinks giant reported a 3.9 per cent drop in annual sales to £8.10 billion over the year to 30 June. The slump marks the third consecutive year of declining sales for the business, whose brands include Absolut Vodka, endorsed by Paris Hilton, and Jameson Irish whiskey.
Annual sales in the United States fell by 14 per cent over the period. Pernod Ricard flagged a "spirits market slowdown with economic moderation and subdued consumer confidence," adding that it does not expect to return to sales growth in the American market until after 2029.
Following the slowdown, the group now expects overall sales growth between 2027 and 2029 to land closer to the lower end of its previous forecast range of 3 per cent to 6 per cent.
China Tariffs and Market Weakness
The company has also been impacted by severe sales declines in China, where annual revenue dropped 19 per cent. Pernod Ricard attributed the slump to "continuing weak consumer sentiment" in the country and tariffs imposed by Beijing on brandy imports from the European Union.
Pernod Ricard's struggles reflect widespread challenges across the global drinks industry, as alcohol giants contend with consumers cutting back on drinking amid cost-of-living pressures and growing health concerns.
Earlier this year, Pernod Ricard held merger talks over a £22 billion tie-up with Brown-Forman, the Louisville-based American manufacturer of Jack Daniel's whiskey. However, discussions between the two companies were terminated in April.
Commenting on the results, Chris Beckett, consumer staples analyst at investment firm Quilter Cheviot, said the lower sales guidance provided "a more realistic guide and broadly in line with what Diageo has been saying."
Beckett added: "Pernod does have a credible strategy in place, and right now has a very low and undemanding valuation. For investors, this is now a value play, and an attractive looking one at that."
Strategy and Ready-To-Drink Growth
To address shifting consumer habits, Pernod Ricard announced plans to adapt to "evolving market conditions" in the United States. The group aims to capitalise on expanding demand for "ready to drink" canned and tinned beverages, a segment that grew 12 per cent over the past year.
Industry rival Diageo, the London-headquartered owner of brands such as Johnnie Walker and Smirnoff, has also directed substantial investment into ready-to-drink products, which are gaining rapid popularity among younger drinkers.
Pernod Ricard shares trading on the Euronext exchange in Paris fell 5 per cent on Thursday morning following the announcement, extending losses of more than a third over the past year.
