Pernod Ricard cut its sales forecasts for 2025 and beyond as tariffs, especially affecting its Martell cognac brand in China, weigh on the French spirits maker during an already tough time for the industry.
The world's second-largest western spirits maker pulled forward its half-year results to report steep sales declines of 7% and 25% in the US and China respectively, warning of a low single-digit sales decline this year, having previously expected modest growth.
Shares in the maker of Absolut vodka and Mumm champagne, however, rose 3%, with analysts saying the results and outlook were in line with their expectations.
Pernod's deteriorating outlook was largely attributed to Chinese duties on cognac, which Beijing imposed in response to European Union tariffs on electric vehicle imports, as well as weakness in Asia travel retail, exacerbated by the political situation in South Korea.
China remained very weak, it said, with early signs of a very soft Chinese New Year and a significant drop in gifting.
The company now also faces the threat of US tariffs on Mexico, Canada and the European Union, which would affect products ranging from Irish and Canadian whiskies like Jameson to tequila and agave brands like Codigo 1530.
Intense Geopolitical Uncertainties
Pernod said such intense geopolitical uncertainties forced it to revisit its guidance.
It said 2026 would be a transition year and guided for between 3% and 6% organic sales growth for 2027-2029 compared to 4% to 7% previously.
Diageo, the world's top spirits maker, withdrew its medium-term sales goals entirely earlier this week after facing pressure from investors who saw them as unrealistic.
"It is helpful for Pernod to attempt to quantify the next few years however many questions remain," said Laurence Whyatt, analyst at Barclays, saying tariffs in particular clouded the outlook for its upcoming financial year starting 1 July.
