Pernod Ricard says U.S. sales fell 10% after distributors cut inventories

Pernod Ricard said Thursday that its sales in the United States fell 10% in the first quarter of its 2026/27 fiscal year, as distributors and retailers reduced inventories in a weaker spirits market that remains under pressure across much of the beverage industry.

The French drinks group, which owns brands including Jameson, Absolut, Malibu, Kahlúa and Martell, reported first-quarter net sales of €2.234bn. On an organic basis, net sales slipped 0.9%. Reported sales fell 6.3%, reflecting a €127m perimeter impact tied mainly to the disposal of Imperial Blue and its wines business, along with a small foreign exchange effect.

The company said the U.S. decline had been expected and was largely driven by inventory adjustments. Pernod Ricard described the broader American spirits market as still soft, with total spirits value down about 2% and bottled spirits down about 4%. It said underlying trends improved slightly over the summer and that its sell-out performance, a measure tied more closely to consumer purchases, narrowed its gap with the market compared with the previous quarter.

That matters beyond one company’s results because the U.S. remains one of the most important profit pools for global alcohol producers. A 10% drop at a large supplier such as Pernod Ricard adds to signs that spirits companies may need to keep adjusting stock levels, distribution plans and sales forecasts as wholesalers and retailers stay cautious. The pressure is most direct for liquor companies, but it can also affect broader beverage planning in wine, ready-to-drink products and other alcohol categories that compete for the same shelf space and consumer spending.

Pernod Ricard said some of its brands in the U.S. performed better than their competitive sets despite the market weakness. Jameson and Kahlúa both outperformed their peers on sell-out, the company said. It also reported a marked improvement in Skrewball and a strong rebound for Malibu. Recent product launches in the market include Malibu Pink, a small-format Skrewball Peanut Butter & Jelly flavored whiskey, and Jameson Distiller’s Batch.

The U.S. weakness was one of the main drags on the quarter, along with China, where sales dropped 25%. Pernod Ricard also linked that decline to inventory adjustments, but said underlying depletions in China returned to growth. The company said that improvement supported cautious trade optimism ahead of the Mid-Autumn Festival. It added that Martell’s off-trade depletions returned to growth after a promotional campaign, while on-trade demand remained under pressure from a regulatory crackdown.

Outside the U.S. and China, the company said sales in the rest of the world grew 4%. India stood out, with sales up 19% as demand remained strong and premiumization continued. Pernod Ricard said growth in India was broad-based, with imported spirits posting very strong double-digit growth and local whisky brands Royal Stag and Blenders Pride also gaining. It said sales in India also benefited from easier comparisons after last year’s excise policy changes in Maharashtra and from a favorable pipe-fill effect linked to preparatory steps for a possible initial public offering of its local unit, though the decision to proceed remains subject to board approval.

The company’s regional picture was mixed. In the Americas, sales fell 9%, reflecting the drop in the U.S. Canada posted a modest decline as continued growth in ready-to-drink products was not enough to offset pressure on spirits. Brazil also declined, largely because of timing effects, while Mexico fell sharply as weak consumer demand continued.

In Asia and the rest of the world, sales rose 9%, helped by India as well as dynamic growth in Japan and improved trends in South Korea and Taiwan. Pernod Ricard also reported strong results in Africa and the Middle East, led by Türkiye, and said South Africa remained resilient.

Europe had a soft start to the fiscal year, with sales down 6%. Pernod Ricard said some markets were affected by timing issues and continued weakness in bars and restaurants. It pointed to modest declines in several Western European markets, a sharper ongoing decline in Germany, and customer negotiations in Poland.

Global travel retail sales fell 4%. The company said the conflict in the Middle East continued to disrupt travel flows and had a disproportionate impact on Asian travel retail markets. It added that Europe performed strongly in travel retail, supported by high traveler numbers.

By brand group, strategic international brands were down 1%. Pernod Ricard said Jameson, Ballantine’s, Malibu and Perrier-Jouët showed strong momentum, while Chivas Regal and Royal Salute posted more modest growth. Those gains were offset by declines in Absolut and Martell, with Martell notably affected by inventory adjustments. Strategic local brands rose 6%, driven mainly by Royal Stag and Blenders Pride, while specialty brands fell 5%, largely because of the U.S. market, though Código and Monkey 47 delivered good results.

The company said first-quarter volumes returned to growth, rising 6%, while volumes for its strategic international brands increased 2%. It also said the global backdrop remains volatile and uncertain, citing the wars in Europe and the Middle East as well as cost-of-living pressure in some markets.

For the full fiscal year, Pernod Ricard said it expects organic net sales to be broadly stable. It still anticipates declines in the U.S. and China because of the same inventory adjustments seen in the first quarter, while expecting underlying trends in China to improve and momentum in the rest of the world, especially India, to remain positive. The group said it plans to keep advertising and promotion spending at around 16% of net sales.

Pernod Ricard also said it would aim to protect its organic operating margin through strict cost control and faster implementation of efficiency measures while continuing to invest in digital transformation. It expects strategic investments of about €700m and cash conversion of about 90%.

Looking beyond this year, the company said it is targeting average organic net sales growth near the lower end of its 3% to 6% medium-term range for fiscal 2027 through 2029, acknowledging the current softness in the U.S. market. It said it expects margin expansion and stronger cash generation over that period, with a goal of bringing its net debt-to-EBITDA ratio below 3 times by fiscal 2029.

For the U.S. drinks market, the quarter adds another signal that the post-pandemic reset in spirits is still working through supply chains. Inventory reductions can weigh on producers’ reported sales even when consumer purchases are steadier than shipments, but the figures also point to a market in which suppliers are being forced to stay more disciplined on pricing, promotions and distribution as growth slows.