World: Pernod Ricard streamlining its business to combat downturn in sales

Pernod Ricard is streamlining its business by grouping brands into two main divisions, according to internal presentation slides seen by Reuters on June 18, as European spirits makers grapple with a downturn in sales.

Drinkers in key markets such as China and the United States have reduced spending in the face of inflation or other economic worries while international trade tariffs have also hurt sales.

The world's No. 2 Western spirits maker from France told Reuters it had announced an "internal project to create a more agile and simplified organisation".

It had already announced job cuts in China, where steep anti-dumping duties on Pernod's Martell cognac label have hit sales hard, as well as a plan to cut 1 billion euros ($1.15 billion) in costs by its 2029 financial year.

In a staff memo reviewed by Reuters, Chief Executive Alexandre Ricard said the project, dubbed "Tomorrow 2", was intended to "further advance the simplification of our organisation".

Ricard told staff in a video that the restructuring, which includes bundling administrative tasks rather than having brands operate individually, would lead to "departures", two sources said. There were no further details about the impact on jobs.

In the presentation slides seen by Reuters, the company said it would organise its brands into two main units, named Gold and Crystal. The Gold division would include champagne and brands such as Martell cognac and Irish whiskey Jameson while Crystal will include Havana Club, Absolut vodka and some French aperitif brands.

The company plans to implement the changes, including voluntary departures, in the last three months of 2025, the slides showed.

"These changes imply the launch of local consultation processes with our social partners and employees where necessary," Pernod Ricard said without commenting on the number of jobs affected or the plan to group brands into two units.

Last month rival LVMH's wines and spirits division announced plans to shrink its workforce by nearly 13%.

Pernod, Diageo, and Remy Cointreau have also had to adjust their growth expectations as the boom in sales enjoyed after the COVID-19 pandemic has gone into reverse.

All three companies have scrapped or reduced ambitious sales targets for the coming years. Remy and other rivals, such as Jack Daniel's maker Brown-Forman, have also cut jobs.

Diageo, the world's largest spirits maker, also plans to cut $500 million in costs and make substantial asset disposals by 2028.

Pernod reported a 3% decline in third-quarter sales in April. Its shares have lost about 50% since the start of 2023 as sliding sales and tariffs have weighed on investor sentiment.