Jameson-owner Pernod Ricard banks on improved sales as demand weakens across key markets

Falling demand in the US and China has left full-year forecasts depending on a rebound in demand over the coming months

Jameson Distillery, Midleton. Picture: Andy Gibson

Jameson-owner Pernod Ricard has posted worse-than-expected sales following heavy pressure on the drinks giant's US and Chinese businesses, with the group's full-year forecast anticipating a rebound in demand over the coming months.

Consumers have been cutting back on expensive spirits in the world's top two economies with Pernod, which also makes Martell cognac and Absolut vodka, hoping trends would improve following a cut to its full-year forecast in February.

However, the group noted "soft" Lunar New Year in China, when huge celebrations normally giving a boost to spirits sales.

In the US, wholesalers and retailers continued to cut pricey booze from their inventories as sales come off extraordinary highs seen after the pandemic, Pernod said. 

However, it noted that Jameson and newly acquired brands "accelerated brand activation," with Jameson Original gains share within its competitive set, following the largest-ever PR USA investment over the Saint Patrick’s Day period.

The Irish whiskey also performed strongly in Canada, Germany, the UK, Spain, Poland, India, China and South Africa, the group said.

It left its full-year guidance unchanged, betting "dynamic" final quarter sales could help deliver its guidance for a broadly stable annual performance.

Pernod's sales stood at €2.35bn in the three months ending on March 31, flat on a like-for-like basis versus analysts' expectations of 2.9% growth.

The company said volumes rose 1% during the quarter, marking the first volume growth in a year.

In China, sales slumped 12% during the third quarter and U.S. sales declined 11%. In India, however, strong consumer demand boosted sales by 8%.

Pernod shares traded 1.4% lower early Thursday in Paris. They’re down 34% for the past 12 months.

Pernod predicted organic profit from recurring operations to grow by 1% in the full year ending June 30, with an organic margin expansion.

Looking forward, it said it would build on a "very strong" year in 2023 and a "robust" performance in the last nine months, adding that it remains "confident in its medium-term financial framework" and is still aiming to achieve medium-term sales growth towards the top of its 4-7% range.

Additional reporting from Reuters.