Pernod Ricard Sales Dip 0.9% as India Boom Cushions Steep China Fall
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Pernod Ricard posted a 0.9 per cent organic net sales decline to €2.234 billion for its fiscal first quarter. The result beat market forecasts of a 1.7 per cent drop.
Sales in India jumped 19 per cent, offsetting double-digit slumps across mainland China and the United States. Group net sales reached the equivalent of $2.5 billion in the three months to September 30. Paris-listed shares rose 3 per cent.
India drives volume as listing nears
India delivered the strongest performance across the group’s global network, serving as its primary growth engine for premium spirits in South Asia. Demand for Absolut vodka and Martell cognac remained resilient across Indian retail outlets and hospitality venues. Distributors in western markets, by contrast, continued to trim excess inventory.
Preparatory work is underway for a potential initial public offering of the Indian business. Execution remains subject to board approval and broader market conditions. Finance chief Mauve Croizat noted the listing process will take several months to complete once cleared.
China consumption shifts behind closed doors
Revenue in China plunged 25 per cent during the quarter as weak consumer sentiment and distributor destocking took a toll. Wholesalers across tier-one and tier-two cities held back on orders to avoid accumulating slow-moving stock ahead of key promotional windows.
“India delivered the strongest performance across the group’s global network, serving as its primary growth engine for premium spirits in South Asia.”
Croizat told analysts that inventory adjustments in China and the United States will persist throughout the fiscal year. Chinese drinking habits are also shifting toward private gatherings at home. Moving away from nightclubs, banquet halls, and dining out reduced high-margin venue sales for premium cognac.
Diverging fortunes across regional retail
Beverage distributors and bar operators in Asia face sharply diverging conditions in India and China. Indian retail channels are expanding rapidly into higher-tier spirits categories, giving brand owners pricing power that has vanished in East Asia. In China, distributors face prolonged margin compression as they discount slow-moving luxury stock to protect working capital.
Relying on traditional Chinese banqueting channels to sustain luxury valuations carries clear risks. While rival Diageo and regional cognac houses face identical headwinds across East Asia, Pernod Ricard has cushioned the blow through its dominant distribution footprint across the subcontinent. Competing distillers without established Indian bottling networks now risk falling further behind in total regional volume.
Defending margins in an extended downturn
Earlier this year, Pernod Ricard made an unsuccessful merger approach to Jack Daniel’s owner Brown-Forman to weather post-pandemic demand weakness. Net sales across the United States fell 10 per cent in the quarter, matching sluggish retail patterns seen across North America over the past eighteen months.
Management reiterated guidance for broadly stable net sales across the full 2027 fiscal year, relying on strict cost controls to defend organic operating margins. Through 2029, the company expects annual net sales growth to track at the lower end of its 3 to 6 per cent medium-term target range, with investors focused on the board’s formal decision on the timing of the Indian market float.
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