As expected, the year started slowly, with declines in China and the United States leading to first-quarter organic net sales of -7.6% and reported sales of -14.3%. This, in a nutshell, is the performance of Pernod Ricard, the French spirits company, in the first quarter of fiscal 2026.

Sales for the first quarter of fiscal 2026, the official press release emphasizes, totaled €2,384 million. The unfavorable exchange rate impact was €143 million, primarily related to the US dollar, while the negative impact from the scope of operations was €54 million, primarily related to the sale of Wines.

"We are encouraged that our U.S. sales continued to outperform the market," the official statement explains. Net sales in the U.S. declined 16% in the first quarter, amplified by some inventory adjustments. Sales in China, which fell 27%, "suffered a sharp contraction, according to the company, with ongoing macroeconomic weakness impacting consumer sentiment and demand, in addition to some inventory adjustments." India recorded strong underlying growth (+3%), with the exception of the state of Maharashtra, where demand was impacted by changes in fiscal policy. Europe fell 4%.

Global sales in the Travel Retail segment were weak, declining 15%. They will benefit, the statement emphasizes, "from the recovery of our Cognac sales at China Duty Free starting in the second quarter. Thanks to our broad geographic footprint, positive performances in numerous markets across most regions—Asia, Africa, the Middle East, North America, and Europe—helped partially mitigate the decline in our core markets."

Markets that saw positive sales performance in the first quarter included Canada, Turkey, Japan, and South Africa. Price/mix was significantly impacted by a negative market mix. Volumes decreased in key markets, particularly the United States and China due to the impact of destocking, and in India due to changes in Maharashtra's tax policy.

For fiscal 2026, Pernod Ricard says, "we continue to expect an improvement in organic net sales trends, peaking in the second half of the year. We continue to focus on increasing the appeal of our brands through careful allocation, efficiency, innovation, and experiences, with our advertising and promotion investment ratio expected to remain around 16%."

"We will defend our organic operating margin to the fullest extent possible," the statement continues, "supported by rigorous cost control and the implementation of our €1 billion operational efficiency program for the 2026 to 2029 financial years, which includes adapting our organization to be "fit for the future." We will continue to focus on cash generation, with strategic investments of less than €900 million and solid management of operating working capital. Cash conversion is expected to further improve compared to the 2025 financial year. A significantly negative exchange rate impact is expected."