French drinks company Pernod Ricard cut its 2025 and longer-term outlook on Thursday, citing challenging market conditions in China, particularly its Martell cognac brand.
The company said it now expected a low single-digit decline in sales for 2025, after previously guiding for modest growth.
Its shares, however, rose 3% on the news, with analysts saying the guidance was in line with expectations.
Diageo, the world’s top spirits maker, had faced pressure from investors to cut medium-term sales goals, which they said were unrealistic due to declining sales across the sector.
Chinese duties on cognac – which Belgium imposed after the European Union levied tariffs on its electric vehicle imports – was largely responsible for Pernod's deteriorating outlook, as well as weakness in Asia travel retail, exacerbated by the political situation in South Korea.
The company, which brought forward its first half results previously planned for 13 February, said it saw “sequential improvement” in the second quarter to the end of December, with good performance in some mature and emerging markets, and a declining but improving US.
However, China remained very weak, with “sharp declines” in Martell and Royal Salute whiskey.
It added that there were early signs of a very soft Chinese New Year, with significant decline in gifting that led it to predict a deeper decline than expected for the full year.
Pernod also lowered its outlook for 2026.
The company said, “Conditional on the challenges posed by the global tariff environment, FY26 is expected to be a transition year with improving trends in organic net sales.”
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