Pernod Ricard steers growth expectations to the low end after weakness in the United States

Pernod Ricard reported net sales of 2.234 billion euros in the first quarter of fiscal 2027, a 6.3% drop from the same period a year earlier, as weaker results in the United States and China and the effect of recent divestments weighed on the French drinks group’s reported revenue.

The Paris-based company, the world’s second-largest producer of wines and spirits, said the decline was smaller on an organic basis. Excluding currency movements and changes in the scope of the business, net sales fell 0.9%. The company also said sales volume returned to growth during the quarter, rising 6%, while volume for its Strategic International Brands increased 2%.

Pernod Ricard said the gap between reported and organic performance was driven mainly by a negative perimeter effect of 127 million euros. That impact was linked primarily to the disposal of Imperial Blue and its wines business. Foreign exchange had a much smaller effect, reducing sales by 3 million euros, mainly because of movements in the Indian rupee and the Turkish lira.

The quarter showed a clear split between markets. Sales in the United States fell 10%, while sales in China dropped 25%. Pernod Ricard said both declines were caused by inventory adjustments, a development the company said it had expected. Distributors and retailers in those markets reduced stock levels rather than placing new orders at a normal pace, which cut reported sales even as underlying demand trends began to stabilize in some areas.

Outside those two key markets, the group posted growth. Excluding the United States and China, sales in the rest of the world rose 4%. Pernod Ricard said performance was especially solid across parts of Asia and in other international markets. Results were more moderate in Europe and Latin America, where the company did not report the same level of momentum.

The first-quarter figures reflect the mixed environment facing global consumer goods companies, particularly in alcohol. Pernod Ricard said trading conditions remain volatile and uncertain, pointing to ongoing conflicts in Europe and the Middle East as well as cost-of-living pressure in some countries. Those factors have affected consumer spending patterns and have made planning harder across markets, even for large companies with broad geographic exposure.

Even so, the group said conditions are improving in several important markets. It pointed to the breadth of its premium brand portfolio, its balanced global footprint and its ability to adjust quickly to shifting market conditions. The return to volume growth in the quarter was one of the signs the company highlighted in support of that view.

Pernod Ricard’s update suggests that management is now placing more emphasis on the pace of recovery in the United States, one of its most important markets. The company said that because of the current weakness there, it now expects average organic net sales growth for the period from fiscal 2027 through fiscal 2029 to be near the lower end of its previously stated +3% to +6% range.

That guidance indicates the group still expects growth over the medium term, but at a slower pace than the upper end of its earlier target would imply. The company did not change the range itself, but its latest statement makes clear that the U.S. market is the main reason it is now steering expectations toward the bottom of that band.