Pernod Ricard Says Iran Conflict Is to Blame for Sales Slide

Pro-government supporters gather next to an effigy of former commander of the Islamic Revolutionary Guard Corps Quds Forces Major General Qassem Soleimani and a portrait of Iran’s late Supreme Leader Ayatollah Ali Khamenei on April 14 in the Shahid Boroujerdi residential complex in southern Tehran, Iran. (Photo: Morteza Nikoubazl/NurPhoto via AP)

Pernod Ricard is warning that escalating conflict involving the U.S., Israel and Iran is beginning to weigh heavily on its global business, particularly in travel retail, as the spirits giant lowers its full-year outlook.

The Paris-based company now expects net sales to decline between 3% and 4% for its fiscal year ending in June, reversing earlier expectations for improving growth trends. The revised forecast comes as disruptions tied to the conflict have effectively shut down duty-free and travel-related sales in parts of the Middle East.

For the quarter through March, Pernod Ricard reported total sales of €1.945 billion, down 15% compared to the same period last year. On an organic basis, which strips out currency impacts, sales were essentially flat.

The company’s portfolio includes major global labels like Absolut, Jameson, Malibu, Glenlivet, Martell and many more.

Travel Retail Takes a Hit

The company’s travel retail division — historically a key growth driver fueled by airport and tourism spending — has been among the hardest hit.

Airport closures across Gulf hubs and broader airline disruptions have stalled international travel in affected regions. According to company executives, travel retail operations were “essentially entirely closed” last month in countries directly impacted by the conflict.

Even before the shutdown, the division had posted 11% growth during the quarter, boosted by Lunar New Year demand and cruise activity. That momentum is now expected to reverse, with full-year declines likely.

Broader Market Pressures Persist

The geopolitical disruption adds to ongoing challenges in Pernod Ricard’s largest markets:

• United States: Sales fell 12% in the quarter as consumers continue to moderate alcohol consumption.
• China: Revenue dropped 7% amid weak consumer confidence and restrictions on alcohol at official events.
• India: A bright spot, with sales rising 11% driven by strong demand for both local and imported brands.

With geopolitical instability, soft demand in key markets and shifting drinking trends, Pernod Ricard is now prioritizing cash generation and scaling back some planned investments.

Brown-Forman Merger Talks

Against this backdrop, Pernod Ricard confirmed it remains in ongoing merger discussions with Brown-Forman, the Kentucky-based producer of Jack Daniel’s, Woodford Reserve and Old Forester.

Analysts say a potential tie-up could help both companies navigate slowing demand and shifting consumer habits, though any deal would be complex given both firms’ family-controlled structures.

Pernod Ricard isn’t the only suitor for Brown-Forman, however. Sazerac, which owns Buffalo Trace, has reportedly thrown its hat in the ring with a purported $15 billion acquisition offer.