Pernod Ricard’s organic revenue fell 4.4% across the first three quarters of its 2026 financial year, with the United States down 14% and China down 24%.
The shares have fallen roughly 40% from their 2023 peak, and the group is targeting a return to growth in FY27 to FY29 through cost cutting including layoffs.
LVMH’s wines and spirits division grew 5% organically in the same half, with profit up 11% to EUR 582 million.
Two portfolios, one category, opposite outcomes. That gap is a structural argument, not a cyclical one.
The spirits sector is often described as a single market in a single downturn. This year’s results make that description hard to sustain. LVMH’s wines and spirits division returned to growth in the first half of 2026 with revenue up 5% organically and profit up 11%, while Pernod Ricard’s organic revenue fell 4.4% across the first three quarters of its financial year. Both operate in the same categories, sell to the same consumers and face the same tariffs. The divergence therefore says something about portfolio construction rather than about demand. Here is what separates them and what it means for the category.
What Each Group Reported
The contrast is sharp enough to be worth setting out plainly.
LVMH Wines & Spirits
Pernod Ricard
Revenue trend
Up 5% organic, H1 2026
Down 4.4% organic, nine months FY26
Profit
Up 11% to EUR 582 million
Operating margin near 30%, under pressure
United States
Contributing to recovery
Down 14% organic
China
Still weak
Down 24% organic
Stated driver
Champagne and cognac recovery, volume-led
Cost cutting toward FY27 to FY29 recovery
LVMH’s improvement was supported by volume rather than price alone, which we examined in the first real signs of recovery in champagne and cognac. Pernod Ricard’s decline is concentrated in the two markets that drove the previous decade of category growth.
Key figure
Minus 24% in China. Pernod Ricard’s organic decline in the market that underwrote the industry’s premiumisation strategy. A portfolio built for that market is now carrying a cost structure sized for demand that has not returned.
Organic revenue change, 2026. Source: company results.
Why Is the Gap Structural?
Three differences explain most of it, and none of them are fixable within a quarter.
Category mix. LVMH’s spirits exposure runs through champagne and cognac at the prestige end, where scarcity and collectibility provide a floor. Pernod Ricard’s portfolio is broader and skews toward whisky, gin, vodka and cognac at price points more exposed to trading down. When consumers drink on more occasions but in smaller quantities and at lower price points, breadth is a liability rather than a hedge.
Portfolio insulation. LVMH’s wines and spirits division is its smallest by revenue and sits inside a group with fashion, beauty retail and jewellery. A weak year in spirits is absorbed. Pernod Ricard is a spirits company, so there is nothing to absorb it.
Ageing stock economics. Both hold maturing inventory, which is expensive to carry. A house that filled its cellars expecting premium Chinese demand and met a trading-down consumer carries that cost for years, and the write-down is slow rather than sudden. This is the deeper problem the category discovered: ageing warehouses are not vaults, they are bets on future demand.
Good to know
Organic revenue strips out currency movements and portfolio changes, showing whether the existing business actually sold more. It is the figure that matters in spirits because reported revenue can be flattered by a weak euro or by acquisitions. Note also that Pernod Ricard’s financial year runs to June rather than December, so its nine-month figures cover a different period from LVMH’s calendar half, and the two are directionally comparable rather than exactly aligned.
What Pernod Ricard Is Doing About It
The response is cost, not repositioning. The group has indicated it expects to return to growth and margin expansion across FY27 to FY29, driven by cost reduction including layoffs, while maintaining operating margins near 30%.
That is a defensible plan and it has a limitation worth naming. Cost cutting protects margin on a shrinking base. It does not address the two things actually causing the decline: a Chinese market that has not stabilised and an American consumer trading down. Neither responds to a leaner cost structure.
The sector’s wider answer has been scale. Consolidation talk has circulated around the major spirits groups on the reasoning that size helps navigate a harder environment. We have not been able to verify the specifics of any current discussion and will not report them as fact, but the strategic logic is straightforward: distribution leverage and cost absorption improve with scale, and both are under pressure.
What Would Signal a Genuine Turn
Three markers, none of which have appeared yet.
Chinese stabilisation. Not growth, simply an end to the decline. Nothing structural improves for cognac-weighted portfolios until this happens.
Volume growth rather than price-led revenue. Recovery that arrives through units means the consumer base is rebuilding. Recovery through pricing means the same shrinking base paying more, which we set out in why volumes matter more than revenue.
Trade policy clarity. The category exports almost everything it makes, and tariff arrangements have shifted repeatedly, including a Scotch tariff reversal in May 2026 that eased pressure on Scotch-weighted portfolios.
Key takeaway
Breadth was supposed to be the hedge and it turned out to be the exposure. The portfolios holding up are the ones concentrated at the prestige end where scarcity provides a floor, not the ones spread across price points where a trading-down consumer meets you at every tier simultaneously.
Bottom Line
LVMH’s wines and spirits division grew 5% organically with profit up 11% while Pernod Ricard declined 4.4% across nine months, with the United States down 14% and China down 24%. Same categories, same consumers, opposite results, which points to portfolio construction rather than to a uniform category downturn. Pernod Ricard’s cost programme protects margin on a smaller base and does not address either cause of the decline. For the category the useful signal is not the next set of headline numbers but whether Chinese volumes stop falling and whether any recovery arrives through units rather than through price. The structural framing sits in wine and spirits branding, and the collectible tier that has behaved differently throughout in the champagne of the elite.
FAQ
Why is China so important to the spirits industry?
Because it drove the premiumisation strategy of the past decade, particularly for cognac, where gifting and business entertainment supported high-value volumes. Producers expanded ageing stock and capacity in anticipation of continued growth. When demand fell, that inventory became a carrying cost rather than an asset, and the adjustment takes years rather than quarters.
Does cost cutting work in spirits?
It protects margin and it does not create demand. Reducing headcount and procurement spend can hold profitability while revenue declines, which buys time. What it cannot do is address consumers drinking on more occasions in smaller quantities at lower price points, since that is a demand-side change requiring product and positioning responses rather than efficiency.
Is champagne performing better than spirits?
The prestige tier is. Champagne at the collectible end functions partly as a store of value and has held up on scarcity rather than consumption, which is why prestige launches continued through the downturn. The volume tier does not have that protection and has behaved much more like the wider spirits category.
What does organic growth mean in these results?
Revenue growth excluding currency movements and changes in the group’s perimeter such as acquisitions or disposals. It shows whether the existing business genuinely sold more, which is why analysts prioritise it over reported revenue in a sector where a weak euro can flatter headline figures considerably.
Charley covers the business behind the world’s leading maisons for The One Percent: results, strategy, and the quiet signals that tell you where ultra-high-net-worth money is actually moving. No press-release recycling, no hype.
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