India and Cognac

India and Cognac

Pernod Ricard's recovery case rests on two concrete pillars rather than a general rebound. India — 13% of sales and now the group's second-largest market — has grown organically every year through the downturn [1]. Martell's collapse is largely one country: cognac fell 17% in the latest half but rose 20% outside China, where a duty-free suspension tied to an EU-brandy anti-dumping case did most of the damage [2]. Both pillars are where the cyclical reading, if correct, should appear first.

Sources: H1 FY26 Results Presentation, Top Markets [3] and brand performance [4]. India organic +4% is +8% excluding the divested Imperial Blue.

The market still growing

In the half to December 2025, India was the only major market in organic growth: net sales rose 4% (8% excluding the divested Imperial Blue value brand), against declines of 15% in the US, 28% in China, 12% across the Americas and 3% in Europe [5] [6].

Source: H1 FY26 Results Presentation, Top Markets [7] and Regions [8].

This is not a one-half accident. India grew 13% in FY2023 [9], 6% in FY2024 [10] and 6% again in FY2025 — 8% excluding Imperial Blue [11]. Somewhere in FY2024 it passed the US to become the group's second-largest market by net sales [12].

Source: FY23, FY24 and FY25 results presentations and H1 FY26 presentation [13] [14] [15] [16]. FY2025 and H1 FY26 are +8% excluding Imperial Blue.

The support underneath the number is structural. India is the world's largest whisky market, adds roughly 25 million new legal-drinking-age adults a year, and sits in the early stages of premiumisation [17]. Pernod Ricard holds the number-one position, with local powerbrands (Royal Stag, Blenders Pride) beneath imported labels — Jameson is now the number-one imported spirit in the market, and the new premium-local Xclamat!on range extends the ladder upward [18]. At roughly €1.4bn of net sales, India is now a scaled compounder rather than a frontier bet.

Two caveats keep this from being a clean offset. First, size: at 13% of the group, India cannot by itself absorb a US (17%) and China (7%) that together are a quarter of sales and falling faster — the mid-term plan needs the mature markets to stop shrinking, not just India to keep growing [19]. Second, the reported number understates a currency drag: the rupee fell about 13% against the euro in the half, cutting €87m from reported net sales, so India's organic strength converts into a softer euro line [20]. Near term, Maharashtra excise changes are also a headwind, weighted to the first quarter [21]. Working the other way, the group expects import-tariff relief from 2026 as trade agreements take effect, with India named among the sources of that easing [22].

Martell, cognac and the China duty-free reset

The other pillar is a resolving event more than a durable engine. Martell — the group's cognac house — fell 17% organically in the latest half, but grew 20% excluding China [23]. Almost the entire decline is one country and one channel.

Source: H1 FY26 Results Presentation, brand performance [24].

The mechanism matters because it is specific and dated. In December 2024, China technically suspended the duty-free regime on cognac as part of its anti-dumping investigation into EU brandy [25]. That suspension fell hardest on the China travel-retail channel — Global Travel Retail sales dropped 13% in FY2025 — and left distributors holding inventory into year-end [26] [27]. Management framed the resolution as a minimum-price undertaking on cognac closing out the anti-dumping case, alongside a separate import-duty increase from 5% to 10% that costs around €45m a year [28].

That resolution arrived. In July 2025 China's commerce ministry issued its final ruling — average anti-dumping duties of about 32% on EU brandy — but accepted price undertakings from 34 producers, including Martell, that exempt them from the duties provided they sell above agreed minimum prices. Martell duty-free sales into China resumed in the second quarter of FY2026, and Travel Retail rebounded to a 3% decline for the half, with the group guiding it to be broadly stable across FY2026 [29] [30]. The mechanical piece of the cognac drag is therefore reversing on a known timetable.

The demand piece is less certain, and it is the counter-fact a bull has to hold in view. The duty-free normalisation restores a channel; it does not restore Chinese consumer appetite for cognac, which management describes as pressured by a tightened regulatory environment on high-end on-trade and weak consumer sentiment [31]. Martell's own price/mix was still negative 9% in the half — the premium ladder is compressing, not just the volume shipped [32]. Together these point to an undertaking that removed a barrier without yet turning the underlying market. On the wider tariff exposure, management's planning scenario runs to roughly €200m of annualised tariff cost, of which it expects to offset about half through supply-chain and pricing actions [33].

What the recovery requires

Set against the medium-term plan, the two pillars carry different weight. The group's own illustration of reaching the top of its +3% to +6% mid-term range leans on India above +6%, the US back above +3%, Travel Retail around +3%, and China no longer a drag [34]. India is the durable compounder in that build; cognac and Travel Retail are a cyclical snap-back off a suppressed base; and the largest single swing remains the US shipment-to-sell-out catch-up examined in Destock or Demand.

The honest read is that these pillars support the cyclical interpretation without settling it. India shows the premiumisation thesis alive and scaling in the one large market where it was never in doubt, and the cognac reset is a discrete, resolving event rather than permanent demand loss — both cut toward "cyclical". But India is too small to offset the mature-market declines on its own, and Chinese cognac demand, distinct from the duty mechanics, has not yet turned. What would move the read is straightforward to watch: India organic growth holding above the mid-single digits once the Imperial Blue base effect washes out, Travel Retail returning to growth as guided, and Martell's China volumes rebuilding rather than merely the channel reopening.