As predicted during its last earnings call in August, Pernod Ricard reported a -2% decline in organic sales in the first quarter of FY 2024, with dips in the U.S. and China bringing down overall performance.
Like other major spirit groups, the French spirits company has experienced a “normalizing” market following rapid growth during the pandemic and inventory adjustments have impacted sales. For the three months to September 30, sales totalled $3.2 billion.
In the U.S. net sales were down -8%; according to chief financial officer Helene de Tissot, the inventory impacts that dampened Pernod Ricard’s performance in the U.S. would be largely contained to the first quarter.
The company added that it has “strong plans for the festive season” while highlighting share gains for James Irish whiskey, Código 1530 Tequila, liqueur brands Malibu and Kahlúa and The Glenlivet whisky. Losses in the U.S. and China were partly offset by a “very dynamic performance” in the rest of Asia, modest growth in India, and stability in Europe and the travel retail channel.
Pernod Ricard’s strategic international brand portfolio was down -3%, mainly driven by Martell in China, Jameson and Absolut in the U.S. and Chivas Regal in Latin America, and partly offset by a strong performance from Ricard and Perrier-Jouët and with growth on Ballantine’s, The Glenlivet, Malibu and Royal Salute.
Strategic local brands were up +5%, with “good momentum” from Seagram whiskies portfolio, Olmeca and Kahlua. Specialty brands fell -6%, but a good performance from Altos and Jefferson’s offset the decline of Lillet and Monkey 47 notably in Europe, on a “high comparison basis” following a strong summer last year.
Continuing with its growing focus on RTDs, the company announced this week the launch of a global partnership with Coca-Cola to introduce Absolut Vodka & Sprite as a ready-to-drink pre-mixed cocktail in 2024. Analysts have flagged the need for Pernod Ricard’s newest acquisitions and innovations to pick up the slack as its flagship brand Jameson faces a natural growth slowdown.
The company said it still expects 4% to 7% net sales growth through FY 2025 as inflationary pressures ease and cost control helps margin expansion.