Pernod Ricard Sales Fall 14.2% in Fiscal 2026

Pernod Ricard’s two biggest problem markets showed little sign of recovery in fiscal 2026.

Persistent weakness in China and the US dragged the French drinks group’s reported net sales down 14.2%, while profit from recurring operations fell 17.9%. The downturn eased in the second half, however, as growth elsewhere helped offset some of the pressure from its two key markets.

According to results released on Aug. 27, Pernod Ricard generated net sales of €9.404 billion in fiscal 2026. On an organic basis, excluding currency movements, acquisitions and disposals, sales declined 3.9%.

Profit from recurring operations fell to €2.423 billion, down 17.9% on a reported basis and 5.2% organically.

There were signs of improvement as the year progressed. The organic sales decline narrowed from 5.9% in the first half to 1.3% in the second. Excluding China and the US, the group achieved organic growth of 0.5% for the full year.

Pernod Ricard described the operating environment as sharply divided. The US remained weak, with inventory reductions compounding sluggish demand, while China continued to struggle with subdued consumption. By contrast, trends improved across much of the rest of the world, returning those markets to growth.

Conflict in the Middle East disrupted some markets in the fourth quarter, while adverse currency movements further depressed reported results.

Despite falling sales and profits, Pernod Ricard generated more cash. Free cash flow rose 6% to €1.197 billion, while the cash conversion rate climbed 17% to 91%. Tight cost controls also delivered an 8% organic reduction in structural costs, double the 4% decline recorded in fiscal 2025.

China & US 

The downturn in the drinks group primarily was caused by two of its biggest markets – US and China.

Organic sales in the US, which accounts for around 17% of group revenue, fell 14%. China, representing roughly 7% of sales, recorded an even steeper decline of 19%.

Pernod Ricard blamed China’s performance on a difficult macroeconomic environment, persistently weak consumer confidence and regulatory measures that further dampened demand. Its Prestige portfolio was particularly hard hit, with Martell suffering a sharp decline.

Martell is one of China’s best-known imported spirits brands. Alongside Rémy Martin and Hennessy, it belongs to a trio commonly referred to in China as the “three major foreign Cognacs.” The brands have long been staples of business banquets and corporate gifting, particularly in Guangdong and Fujian.

But spending on business entertainment has weakened, while restrictions on alcohol consumption introduced in 2025 have dealt another blow to the channel. The combined pressure has disrupted both shipments and sell-through for leading Cognac brands.

One bright spot was China’s duty-free channel, where sales began to recover during fiscal 2026.

Pernod Ricard resumed supplying Cognac to Chinese duty-free retailers after China issued its final ruling in an anti-dumping investigation into European brandy in July 2025. Sales restarted in the second quarter, and Martell delivered strong retail growth during the Lunar New Year period.

The ruling did not, however, bring China’s trade measures against European brandy to an end. The Ministry of Commerce announced its final determination on July 4, 2025, imposing anti-dumping measures for five years from July 5. Producers that comply with agreed minimum-price undertakings are exempt from paying anti-dumping duties.

More importantly, the improvement in duty-free sales was not enough to reverse Martell’s wider decline as China’s weak economy and curbs on business-related drinking continued to weigh on demand.

Some of Pernod Ricard’s premium spirits performed better. The company said its premium portfolio benefited from growing casual dining occasions and an expanding middle class, outperforming its Prestige brands. Jameson achieved double-digit growth in China during the year.

India Emerges as a Growth Engine

India presented a stark contrast to China, cementing its position as one of Pernod Ricard’s fastest-growing major markets.

Organic net sales rose 7% in fiscal 2026, or 9% excluding Imperial Blue, which the group has divested. Pernod Ricard attributed the growth to resilient underlying demand, continued premiumisation and gains in market share.

Its local brands Royal Stag and Blenders Pride both expanded. With annual sales of around 32 million cases, Royal Stag ranked as the world’s largest whisky brand by volume. The company also launched Xclamat!on, a new range of premium Indian spirits.

International brands were another source of growth. Pernod Ricard’s Strategic International Brands achieved double-digit gains in India, led by Jameson. The company described Jameson as India’s best-selling imported premium spirits brand, while Ballantine’s and Chivas Regal also performed strongly.

Yet India’s fragmented regulatory landscape continued to create obstacles. Maharashtra raised alcohol excise duties by around 50% in July 2025, hurting Pernod Ricard’s sales in the state.

The company also faces a far larger regulatory dispute. As previously reported by Vino Joy News, Indian authorities have accused Pernod Ricard of failing to fully disclose the composition and age of imported blended whiskies, allegedly allowing it to reduce the customs duties payable on the products.

The French group faces a demand for US$314 million in back taxes and is seeking to overturn the claim through an appeal.

Other policy changes could work in its favour. The India–UK trade agreement took effect on July 15, 2026, cutting India’s tariff on imported Scotch whisky from 150% to 75%. The rate is scheduled to fall gradually to 40% over the next decade, potentially making British spirits significantly cheaper to import.

Japan and South Korea Return to Growth

Conditions also improved in several other Asian markets.

Japan recorded strong growth and gained market share, with Perrier-Jouët delivering a standout performance. South Korea returned to growth after a substantial market correction.

Taiwan remained an exception, with sales continuing to decline amid persistently weak trading conditions.

Outside Asia, Türkiye maintained strong momentum, led by Chivas Regal, Ballantine’s and Absolut.

Pernod Ricard’s global travel-retail sales declined 3% organically, despite international passenger traffic reaching around 10% above pre-pandemic levels. The resumption of sales through China’s duty-free channel provided some support, but continued weakness in South Korea weighed on the wider Asian business.

FY2027 Outlook: China and US Headwinds Persist

Pernod Ricard expects organic net sales to remain broadly stable in fiscal 2027, with continued growth across most markets offset by further declines in China and the US.

Inventory reductions are expected to weigh on both markets from the first quarter, although the company anticipates an improvement in underlying demand trends in China. India, meanwhile, is expected to maintain strong growth.

Cost control will remain central to the group’s strategy. Pernod Ricard plans to accelerate its operational-efficiency programme, maintain tight spending discipline and push ahead with its digital transformation in an effort to protect its organic operating margin.

The group expects to invest around €700 million in strategic initiatives during fiscal 2027 while continuing to tighten its management of working capital. It is targeting a cash conversion rate of around 90%.

Pernod Ricard aims to complete its previously announced €1 billion operational-efficiency programme by fiscal 2028. It had already achieved roughly half of that target by the end of fiscal 2026.