Jameson maker Pernod Ricard sees sales drop as China and US weakness persists

Premium liquor producers are facing tepid demand in China amid a real estate crisis that has crimped sales

Premium brands including Jameson, Beefeater, Kahlúa and Olmeca continued to grow strongly.

Spirit-maker Pernod Ricard reported weaker-than-expected sales for its latest quarter as lacklustre demand in its top markets of China and the US persisted while consumers resisted shelling out on pricey booze.

Sales at the French drinks giant, whose brands include, Jameson, Absolut Vodka, and Martell Cognac, dropped 5.9% on an organic basis to €2.78bn in the fiscal first quarter, slightly below analyst estimates of €2.84bn.

Premium liquor producers are facing tepid demand in China amid a real estate crisis in the Asian country that has crimped sales.

Pernod and rivals, such as Remy Cointreau, have also been affected by China’s government imposing temporary anti-dumping measures on brandy imports from the European Union. The action by Beijing last week came after the EU decided to impose tariffs of as high as 45% on imports of Chinese electric vehicles for five years.

Paris-based Pernod Ricard’s China sales dropped 26% during the period. While net sales of Martell Cognac and Scotch declined, premium brands including Jameson, Beefeater, Kahlúa and Olmeca continued to grow strongly.

The company said it’s taking actions to mitigate the effect of the anti-dumping moves there but did not provide further details. China’s economic woes are now impacting travel in Asia too, it added.

In the US, another key market, wary consumers are still curbing purchases of top notch spirits following a boom during the post-pandemic era. Despite the region's net sales dropping by 10%, Jameson performed broadly in line with the direct competitive set, Pernod Ricard said.

Pernod Ricard still expects to post net sales growth for this fiscal year. The company said that volumes, which were flat in the quarter as prices fell, should also recover during its fiscal 2025 year.

“Pernod Ricard is in a perfect storm,” said Trevor Stirling, an analyst at Bernstein. “While we continue to believe the stock is significantly undervalued, we see no reason to trigger optimism in the short-term.”

Reporting from Bloomberg and the Irish Examiner.