Pernod Ricard cuts sales guidance over China cognac slump
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Pernod-Ricard's headquarters in Paris. Pernod is among the first corporate casualties of a growing global trade war.
PHOTO: AFP
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PARIS – Pernod Ricard cut its sales outlook on a slump in cognac demand in China, a move seen by investors as a “realistic” step for the French spirits maker.
Pernod, whose brands also include Absolut Vodka, said organic net sales will decline by a low-single digit percentage in its 2025 financial year, after previously forecasting a return to growth.
Demand for the company’s Martell Cognac has been hit by China’s economic slowdown and Beijing’s trade tariffs on European brandy.
Pernod and European Union rivals such as Remy Cointreau are among the first corporate casualties of a growing global trade war.
Revenue in China fell by 25 per cent during the first half of the financial year due to sharp declines in sales of Martell and its Royal Salute whiskey brand, Pernod said.
Gifting fell significantly, and there are early signs that Chinese New Year celebrations were worse than expected, it said. Overall, sales declined 4 per cent organically.
Martell contributed to 90 per cent of the group’s sales decline, which was partly mitigated by increased sales of Absolut Vodka ready to drink cans.
Pernod said it will focus on defending its profit margin via cost cuts, as US President Donald Trump ramps up global trade tensions. It plans to cut costs by €1 billion (S$1.4 billion) between 2026 and 2029.
The US this week imposed a 10 per cent tariff on all Chinese goods,
On Feb 4, London-listed Diageo scrapped a long-held sales target as the British distiller grapples with sluggish growth and a possible tariff battle in the US, its biggest market.
The maker of Johnnie Walker whisky has removed its medium-term guidance of 5 per cent to 7 per cent organic net sales growth, blaming the economic and political uncertainty in many of its key markets.
Threatened US tariffs on Mexico and Canada could “very well impact” Diageo’s momentum, especially its tequila and Canadian whisky brands, said chief executive Debra Crew.
Diageo’s chief financial officer said the firm faces a €200 million hit from China and US tariffs, mostly coming from the Asian nation. BLOOMBERG
