Irish Distillers owner Pernod Ricard today forecast that its sales will grow again next year even as challenges in the US and Chinese markets persist, after reporting an annual 1% drop largely in line with forecasts and its own guidance.
The world's second biggest Western spirits maker and its rivals have suffered as a post-pandemic boom in expensive spirits sales has reversed amid high interest rates, inflation and economic challenges in China, the number one market for alcoholic drinks.
The maker of Absolut vodka and Jameson whiskey in particular has felt the pressure as retailers and wholesalers in the US cut back on pricier spirits stock. Sales have also been slow in China, where a troubled economy hurt consumer confidence.
Net sales for the reporting year ending in June declined by 9% and 10% in those markets respectively, and Pernod said it expected a "soft" first quarter of 2025, with further US inventory adjustments and a "very weak macro context in China".
Elsewhere, however, it said it expected a good performance and that continued volume recovery would help bring net sales back into positive territory.
"The key message is back to growth," Chairman and chief executive Alexandre Ricard told Reuters in an interview. He said consumer sentiment remained volatile but was resilient in many markets.
Its shares rose slightly in early trading, but later surged as much as 8% on news that China's Commerce Ministry had decided not to impose provisional tariffs on brandy imported from the European Union.
Top spirits maker Diageo dragged shares across the sector down in July when it set a gloomy outlook for next year, saying it was difficult to call when the consumer environment and net sales would improve.
Both Diageo and Pernod, however, say they are confident they can ultimately return to far higher growth rates - ambitions some analysts see as overly optimistic given challenges facing the industry.
Ricard declined to be drawn on when Pernod may reach its goal of organic net sales growth closer to 7%, but said it was "not a long-term" time horizon.
Investors, such as Charles de Riedmatten, fund manager at Myria AM, however are also sceptical.
"I don't know why they stick to this," he said. De Riedmatten pointed out that Pernod rarely achieved such growth before the pandemic and lower, more credible guidance would boost shares long-term.
Pernod's 1% decline in 2024 organic net sales was just ahead of the 1.2% drop anticipated by analysts. Profit from recurring operations was well ahead of estimates, up 1.5%.
It proposed a dividend of €4.70 per share today - flat compared to last year.
Jameson Whiskey's net sales up 1%
Irish Distillers said that Jameson Whiskey saw a 1% annual increase in net sales around the world, with particularly strong growth in markets including growth of 52% in India and growth of 99% in China.
Irish Distillers said the continued globalisation of Jameson is reflected in the double-digit net sales growth of the brand in multiple regions globally, including Asia.
Its prestige portfolio, which comprises Redbreast, Midleton Very Rare, Spot Whiskeys, Method and Madness and Knappogue Castle, also experienced global net sales growth of 1% in the financial year.
It said the growth was driven by Redbreast, the world's most awarded single pot still whiskey, and Midleton Very Rare and reflects the continued consumer demand for more premium products in the year.
"The Jameson brand achieved double digit net sales growth in multiple regions around the world. The growth that we are seeing of Jameson in Asia, and in particular, India (+ 52%) is reflective of the success of consistent brand building strategies in new and emerging markets," Nodjame Fouad, CEO of Irish Distillers said.
"India has gone from being an emerging market to Jameson's second biggest domestic market in a matter of years, as consumers continue to experiment with new brands," he added.
"As we look to the future, we have much to be excited about. Plans for our new state-of-the-art distillery on a site adjacent to our existing distillery in Midleton, Co Cork, continue apace, ensuring we can meet production capacity for our world-renowned Irish whiskey in the years to come," he added.
