Pernod Ricard Warns of Sales Hit From Iran War

Pernod Ricard said on Thursday that the war in Iran and the resulting drop in tourism would weigh on its travel retail business and hurt full-year sales, even after the French spirits maker reported a better-than-expected rebound in third-quarter revenue.

The company, which is in talks to merge with U.S. rival Brown-Forman, said organic net sales for the fiscal year that began July 1 were now expected to fall 3% to 4%. Its shares dropped 1.7% in early trading in Paris after the warning.

Pernod, the world’s second-largest Western spirits group after Diageo, said sales in the three months through March 31 rose 0.1% on a like-for-like basis to 1.95 billion euros, or about $2.30 billion. Analysts had expected a decline of 0.7%, according to a company-compiled poll.

The result marked an improvement from a 5% contraction in the previous quarter, helped by stronger demand in India and better global travel retail sales. That was partly offset by continued weakness in the United States and China, where sales fell 12% and 7%, respectively.

Travel retail, which includes duty-free stores at airports and other transit points, accounted for 6% of Pernod’s net sales in 2025. The company said that channel was being hit by shuttered airports and restrictions on travel to the region as the conflict reduced tourist flows.

The warning adds Pernod to a growing list of companies reporting damage from the Middle East conflict. French luxury groups have already pointed to weaker sales in the first three months of the year after a sharp slowdown in shopping across the region.

The spirits industry has been under pressure for several years as demand has softened in major markets. Companies have faced lower valuations, leadership changes and cost-cutting efforts as consumers buy less alcohol and distributors reduce inventories.

In the United States and China, two of Pernod’s most important markets, sales have been hurt by tariff threats, destocking and a sluggish Chinese economy. The company also reaffirmed its longer-term guidance for 3% to 6% sales growth between 2027 and 2029.

Pernod is also navigating merger talks with Brown-Forman that could create the world’s No. 2 spirits maker by sales, behind Diageo. Analysts have said such a deal could generate as much as $450 million in annual savings and help both companies cope with falling alcohol consumption.

But the talks have become more complicated after Sazerac, another U.S. spirits group, offered to buy Brown-Forman for about $15 billion, according to a source familiar with the matter. Pernod finance chief Helene de Tissot told analysts on Thursday that discussions were continuing, but declined further comment on the negotiations.