Pernod Ricard has reported its ongoing challenges in the US and China have held back signs of recovery in the rest of the world.

The French wine and spirits group reported a worse-than-expected 3.9% decline in sales for its financial year 2026, hit by weak demand in the two key regions alongside disruption to tourism from the prolonged conflict in the middle east.

The results marked Pernod’s third consecutive year of sales decline. The group, which is the second-largest spirits company behind Diageo, is now predicting organic net sales growth for 2027 to 2029 to be closer to the lower end of a 3% to 6% sales growth range.

The maker of Absolut vodka said sales declined by 14% in the United States and 19% in China as a weak economic climate and regulatory measures hit demand for prestige brands, notably Martell. The two regions account for about one quarter of the group’s revenue.

Overall group sales reached £8 billion in the 12 months to June 30, 2026, representing a decline of 3.9%. Profit was £2 billion, marking an organic decline of 5.2%.

Pernod said it is aiming to adapt to evolving market conditions, particularly in the US, by introducing innovation in ready-to-drink formats, including Jameson and cola, Beefeater gin with tonic, and canned daiquiris made with its Malibu coconut liqueur. Sales in Pernod’s RTD category reportedly grew 12% for the 2026 financial year, driven by interest from younger drinkers.