Spirits Giant Pernod Ricard Warns Iran War Is Hitting Sales — 2nd Update

By Joshua Kirby

French distiller Pernod Ricard said it is bracing for a decline in sales for the full fiscal year as the impact of the U.S. and Israel's war on Iran weighs on airport retail, adding to a dry backdrop for booze sales.

The Paris-based maker of Absolut vodka, Martell cognac and Jameson Irish whiskey had previously said it banked on improving organic trends in sales over fiscal 2026, which runs through June. But following escalation of conflict in the Persian Gulf in recent months, the company now expects to book a 3%-4% decline in net sales for the year. Pernod reported a 3% drop in its top line last fiscal year.

Continued travel disruption from the war, which has forced Gulf hub airports to close and locked airlines out of the region, is weighing on Pernod's travel-retail division, which includes duty-free sales at airports. The travel business was essentially entirely closed down last month in the countries directly affected by the war, Pernod finance chief Helene de Tissot told analysts in a call Thursday.

The war has also had some limited indirect effects on other markets, including on supply, and has led to wariness among potential travelers, de Tissot said.

The travel business booked sales growth of 11% over the quarter through March, boosted by Lunar New Year travelers buying cognac and a pickup in growth in sales on ocean cruises. But fallout from the Gulf conflict means revenue from the division will probably decline for the fiscal year as a whole, Pernod said.

The hit from the Iran war compounds existing challenges in many key markets for Pernod and its peers in the global booze industry. In the U.S., group sales were 12% lower on year over the quarter as health-conscious consumers continue to shy away from drinking. Pernod said it is attempting to lure new drinkers through eye-catching new products from its labels, including Absolut flavored with Tabasco chili, aimed at brunch-goers, as well as a triple-distilled Jameson and a pink Malibu rum flavored with tropical fruits.

In China, meanwhile, a crackdown on drink at Communist Party meetings and events has squeezed sales of the group's high-end Martell cognac and Scotch whiskies. Consumer confidence in general also remains low in the important market, Pernod said.

"We've seen no tangible signs of improvement in consumer confidence," de Tissot said.

Pernod's China revenue dropped 7% over the quarter, and for the year-to-date is nearly a quarter down from last fiscal year. The company said it will plow less money back into strategic investments this year than previously guided as it focuses on cash generation.

Shares dropped slightly to 66.50 euros in European morning trading, continuing a sharp decline over recent years. That valuation "reflects an uncertain China story and ongoing deterioration in the US market," analysts at RBC Capital Markets wrote in a note following Thursday's update.

With headwinds continuing to swirl, Pernod last month said it was in talks with Brown-Forman, the Kentucky-based maker of Jack Daniel's, over a merger. Talks are continuing, de Tissot said Thursday. Analysts argue a tie-up could offer both groups a means of overcoming tough sales trends, though structuring a deal between the two family-dominated groups could be tricky.

"This is first of all a family affair, and the two dynasties need to agree not just on price, but on who runs the combined entity," AlphaValue analyst Theodore Duval-Segard wrote in a note to clients this week.

India remains a bright spot for the group, with revenue booking a pickup to 11% growth over the quarter as demand for Pernod's local brands and imports alike continued to increase.

For the third quarter through March, Pernod made group sales of 1.945 billion euros ($2.30 billion), down 15% from the same period last year. On an organic basis, with the heavy hits from currency fluctuations removed, sales were 0.1% higher on year.

Write to Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby

(END) Dow Jones Newswires

April 16, 2026 04:58 ET (08:58 GMT)