Pernod Ricard Says U.S. Spirits Sales Remain Weak

Pernod Ricard said on Thursday that the U.S. spirits market remains weak because consumers are under pressure from affordability concerns, even as talks with Brown-Forman continue and the French drinks group tries to steady sales in its largest market.

During an earnings call for its third-quarter results, Hélène de Tissot, Pernod Ricard’s executive vice-president for finance and tech, said the company would not comment further on discussions with Brown-Forman over a possible “merger of equals.” She said the talks were still active. “We did not intend to communicate further until either an agreement is reached or discussions are terminated,” she said. “Discussions are ongoing. So at this stage, I have no further comments to make.”

The remarks came as Pernod Ricard reported a return to growth in the quarter ended March 31, with organic net sales up 0.1% to €1.94 billion, or about US$2.28 billion. Organic sales by volume rose 4%. The company’s strategic international brands portfolio, which includes Absolut Vodka and Jameson Irish whiskey, increased 2% in the quarter.

The U.S. remained the group’s weakest major market. Sales there fell 12% in the quarter, while sales excluding the U.S. and China rose 5%. De Tissot said conditions in the American market “remained soft,” with spirits excluding ready-to-drink products down about 5%, compared with about 3% a year earlier.

She said consumer sentiment in the U.S. was still low and that affordability was weighing on demand. Pernod Ricard has responded by offering smaller bottle sizes and directing more promotional spending toward key brands. The company has also launched products such as Jameson Triple Triple, Absolut Tabasco and Malibu Pink in an effort to reach shoppers at different price points.

De Tissot said the company believes the current U.S. slowdown is mainly cyclical rather than structural. “While the US market remains soft, we are convinced that the current challenges are primarily cyclical, linked to affordability issues,” she said. “However, we are not complacent, and we monitor with vigilance the changing consumer trends, adapting and flexing our brand strategies in response.”

She added that Pernod Ricard expects a busy fourth quarter in the U.S., including Absolut Vodka activations at the Coachella music festival, and said more flavor launches were coming in the weeks ahead. The company is also leaning on pricing promotions and artificial intelligence tools to plan those campaigns more precisely.

De Tissot said Pernod Ricard has more exposure to on-premise drinking venues than off-premise retail in the U.S., but that bars and restaurants have been performing better than stores. The company has been increasing activity in on-trade channels to bring back consumers who have cut back on spending.

She also warned that full-year sales in the U.S. would likely look worse than underlying trends because of inventory adjustments and a difficult comparison with last year, when tariff concerns affected buying patterns.

For the first nine months of its fiscal year, Pernod Ricard’s organic sales were down 4.4%, with U.S. sales falling 14%. Full-year results are scheduled for Aug. 27.

The company also said conflict in the Middle East is expected to reduce full-year organic sales by between 3% and 4%. De Tissot said that region accounts for about 2% of total group sales and that travel retail has been affected by disruptions tied to the conflict. She said global travel retail sales are now expected to show a slight decline for the full year.

During the call, she said March was particularly affected and suggested that without the conflict, third-quarter growth would likely have been slightly positive. She also pointed to possible secondary effects outside the region, including logistics disruptions and weaker willingness among consumers to travel.