Pernod Ricard faced a setback in its third quarter sales as its major markets, the US and China, continued to struggle, resulting in worse than expected performance. The company, known for brands like Martell cognac and Absolut vodka, had initially anticipated a positive shift in trends after revising its full-year forecast in February, but challenges persisted in these key regions.
The impact of reduced consumer spending on luxurious spirits was evident in the world's top economies, with Pernod Ricard feeling the effects of this cutback in demand. The company had been optimistic about potential improvements, especially after a strong Lunar New Year period typically boosting sales in China, but the reality of a "soft" celebration added to their woes. Furthermore, concerns over weakening Chinese demand amid economic uncertainties have raised alarms among investors in various sectors, including beverages and luxury goods.
In the US, Pernod Ricard faced inventory reductions by wholesalers and retailers, reflecting a scaling back on expensive alcohol following a period of heightened sales during the Covid-19 pandemic. Despite these challenges, the company refrained from adjusting its full-year forecast, relying on a projected growth in fourth-quarter sales to achieve a relatively stable performance for the year. With a focus on organic profit growth and expanding margins, Pernod Ricard has set its sights on potential medium-term sales growth within its designated range, despite facing tough market conditions across regions.