Mindaware

French drinks company Pernod Ricard reported a slump in profits and sales today across all five of its “priority markets” in the first half of the fiscal year, according to a Reuters report. And the main driver of this bad news was said to be weakening sales across all of its spirits categories, particularly in the U.S. and China.

Pernod Ricard is the owner of some major distilleries and spirits brands, including Absolut Vodka, Jameson Irish Whiskey, Martell Cognac, and the Glenlivet single malt scotch. Despite the negative figures, the company maintained a sense of optimism about the future. But first let’s get to the bad news: Pernod Ricard reported a nearly 6 percent drop in organic sales over the six months leading up to December, and a 7.5 percent decline in organic profit over the same period of time. As reported at The Spirits Business, Martell sales were down 17 percent, mostly because of the Cognac being removed from travel retail amidst ongoing disputes and new tariffs. Luxury blended scotch brand Royal Salute saw a 19 percent drop, Jameson dipped by 7 percent, and Absolut, Beefeater Gin, and the Glenlivet all slumped by 3 percent each.

As mentioned before, two key markets were largely responsible for the decline: The U.S., which was down by 15 percent, and China, which nearly doubled that with a 28 percent tumble. “The declines in the U.S. and China are amplified by inventory adjustments, and our first half had a negative impact from currency and perimeter effects,” said CEO Alexandre Ricard on an earnings call. “We have indeed been hit by the trade tariffs on one side, by some COGS (cost of goods sold) inflation, particularly on aged liquids which have been partially mitigated through some strong operational efficiency levers.”