French spirits maker Pernod Ricard reported declines in both sales and profit in the first half of its 2026 fiscal year, with sharp contractions in China and the United States weighing on overall performance.
Net sales fell 5.9% organically to €5.253 billion in the six months ended Dec. 31, while recurring operating profit declined 7.5% to €1.614 billion.
China was the weakest major market. Net sales there dropped 28%, marking one of the company’s steepest declines in the country in recent years and widening from roughly a 25% fall in the same period a year earlier. The U.S., which accounts for about 17% of group sales, posted a 15% organic decline. China represents about 7% of total sales.
Pernod Ricard said that excluding China and the United States, performance in other markets was broadly stable, with most regions posting growth. India grew 4% in the period, Japan rose 6% and Turkey surged 27%. Canada, Poland, Ireland, South Africa and other African markets also recorded gains.
The company attributed the downturn in China to tighter regulatory conditions affecting premium on-trade channels, continued macroeconomic weakness and subdued consumer confidence. Elevated inventory levels across parts of the distribution network further constrained sell-through.
The later timing of the 2026 Lunar New Year created an unfavorable comparison in the second quarter, the company said, adding that the impact is expected to normalize in the second half. Still, channel sentiment ahead of the holiday remained cautious.
Martell, Pernod Ricard’s flagship cognac brand and one of China’s long-standing “big three” imported cognacs alongside Hennessy and Rémy Martin, saw net sales decline 17% organically in the first half. Excluding China, however, Martell posted about 20% growth, underscoring the scale of the slowdown in the Chinese market.
Industry participants say the pressure reflects both cyclical and structural challenges.
Zhang Jiarong, general manager of Guangzhou-based Rongpu Wines & Spirits, said Martell has traditionally positioned itself in China’s mid- to high-end segment, with demand centered on business entertainment and gifting.
“In recent years, those occasions have declined significantly, so sales have naturally been affected,” Zhang told Vino Joy News. “If not for the launch of entry-level products such as Distinction over the past two years, the decline could have been even steeper.”
Inventory pressure has also emerged as a constraint. A China-based spirits trader familiar with the cognac market said stock levels remain elevated in some wholesale channels, particularly among first-tier distributors.
After China initiated an anti-dumping investigation into European Union brandy in 2024, many suppliers and importers rushed to build inventory ahead of the outcome.
“Brand owners and importers both wanted to stock up before the investigation results were finalized,” the trader said, speaking on condition of anonymity. “But actual market demand did not expand accordingly, so inventory pressure began to surface more clearly in 2025.”
Beyond inventories, consumer behavior is shifting.
Zhang said cognac was once a common fixture at banquets and wedding celebrations, but drinking patterns have become more restrained.
“Many people now say they are driving and choose not to drink, or they drink only lightly,” he said. “Overall consumption per occasion has declined.”
The anonymous trader added that cognac brands face a demographic challenge.
“It’s not just Martell. Hennessy and Rémy Martin are in similar situations. Their core consumer base skews middle-aged and older, and younger consumers have not effectively replaced them,” he said.
“Young people are losing their fascination with traditional imported spirits. They are no longer pursuing the same high-end status symbolism and are instead turning to more diverse categories.”
China’s trade data reflect that shift. According to customs figures, brandy imports in 2025 fell 38.57% in volume and 41.64% in value from a year earlier.
By contrast, whisky import volumes rose 22.79%, overtaking brandy to become China’s largest imported spirits category. Import value edged down just 1.31%, suggesting resilience for competitively priced whisky.
Imports of gin, vodka, tequila, liqueurs and cordials also rose in both volume and value, as more affordable white spirits gain traction among younger consumers, particularly for home consumption and cocktail occasions.
Pernod Ricard’s brand mix in China mirrors that divergence. While Martell and Chivas were pressured by market conditions, Absolut Vodka and Jameson delivered faster growth in the period, according to the company’s earnings report.
Discover more from Vino Joy News
Subscribe to get the latest posts sent to your email.
