Pernod Ricard is still facing headwinds in the U.S. and China after reporting a -2% organic decline in sales in the first nine months of FY 2024, with sales expected to stay “broadly stable” for the rest of the year.
Overall, reported sales dipped -6% to $9.5 billion (€8.93 billion) with growth in global travel retail channels and India offset by declines in the Americas and China. Volumes grew by +1% in Q3 after four consecutive quarters of decline, with nine-month volumes down at -4%.
In the U.S. sales fell -11% in Q3 with value depletions down -7%, as U.S. retailers are still destocking. The group noted that growth remained broadly unchanged in the U.S.
Like other spirits groups, the French spirits company has faced a normalizing market following a super cycle of growth during the pandemic, leading to high inventories. The group said it expects inventory adjustments in H2 and into 2025, and Hélène de Tissot, EVP of Finance and IT said the group is focusing strongly on working with wholesalers to adjust their inventories “to the new reality.”
In Q3 across all geographies in Asia the group saw accelerated sales (+8%), except for China (-12%) where a soft Chinese New Year typically boosts sales. India has become a bright spot (+8%) with premiumization trends aiding the growth of Jameson, Absolut and The Glenlivet. Sales in Europe were down -6%, but more stable when excluding Russia (+4%).
The group’s strategic local brands, which includes Seagram’s, Kahlúa and Olmeca Tequila earned the most positive results (+5%). Strategic International brands (+1%) including Jameson and Absolut were weighted down by the declines in the U.S. and China. Specialty Brands (-7%) which includes Smooth Ambler whiskies and Del Maguey Mezcal, were down alongside the wine division.
The second largest spirits group still aims to reach the upper end of 4-7% sales growth through FY 2025, and is betting on “dynamic” fourth quarter sales to help meet its forecast. It predicts organic profit from recurring operations will grow by 1% in the full year ending June 30, with an organic margin expansion.