Pernod Ricard Earnings: Despite Weak Volume in Q1, Guidance Suggests Robust Demand

Pernod Ricard reported a decline in volume in the first quarter, but guidance for growth in the full year suggests that management believes underlying demand remains reasonably strong, and that growth will return once Pernod cycles a strong performance in the first half of last year. We reiterate our wide moat rating and EUR 185 fair value estimate and there was around 11% upside to our valuation at the close of trading on Oct. 19. However, industry volume of spirits, which sell at a higher price point than some other alcoholic beverages such as beer and wine, have historically been more cyclical than other consumer product categories, so developments in the global macroeconomy will be key to unlocking that valuation upside in the next year or so.