Alexandre Ricard of Pernod and Diageo's 'definitely just Dave' Lewis have announced losses in their interim results, blaming China and the US, along with pricey Tequila, Canadian whisky and Chinese Baijiu. Scotch fared rather better, reports Tom Bruce-Gardyne …

The two biggest players in Scotch whisky have just posted their half-year (H1 FY26) results within a week of each other. For a change, Pernod Ricard went first, announcing a 5.9% drop in organic net sales for the six months to December 2025 in what was dubbed "a transition year" that will (hopefully) lead to a "new era of volatility and opportunity".

"They were fairly grim, but no grimmer than expected," was the verdict of Trevor Stirling, senior analyst and MD for European and American beverages at Bernstein. "The problem they have is that two of their biggest markets are very, very weak."

No prizes for guessing, we are talking of the US, where Pernod's net sales fell 15%, and China where the fall was a painful 28%. Chivas Bros, the company's Scotch division which was down 5% globally, plays a very different role in each one.

In the US it is focused on single malts, particularly The Glenlivet which claimed to have outperformed its competitive set, though slipped 3% to 700,000 cases globally over the period. Competing with standard blends like Dewar's and Johnnie Walker Red in America, is left to its Irish power-brand Jameson's.

That ugly 'p' word – premiumisation, which used to pepper such results, was conspicuous by its absence bar a mention of "affordable premiumisation" in connection with a Jameson extension. Trevor Stirling still believes the premise that "over time markets premiumise," but concedes that US consumers are currently trading down.

There's talk of green shoots despite all the negative impacts on US demand from tariffs to weight-loss drugs and inflation, though everyone is being cautious. At a post-results event with Pernod's CEO, Alexandre Ricard, Trevor says "they were going out of their way to emphasise it was early signs of potential green shoots."

In China it has clearly been a torrid six months for Chivas Regal, though surely not as bad as its stablemate Martell which would have been up 20% but for this key market. Instead, the brand's net sales tumbled 17%, thanks to a collapse in Chinese demand for Cognac.

Globally, Chivas Regal was flat on a net sales basis while Ballantine's was down 6%, of which 5% was blamed on its price/mix ratio which implies consumers were trading down. The brand's volumes slipped 1% to 5.6m cases. This was eclipsed by the worst performer in Pernod's results – the deluxe blend Royal Salute which competes with Johnnie Walker Blue and whose net sales slumped 19%.

The picture was far better in Chivas Regal's top market, Turkey which posted a hefty 27% surge in net sales during the period. The brand itself saw strong double-digit growth in a country that is now comfortably the biggest importer of bottled blends after the US – an astonishing achievement for a population that is reportedly over four-fifths teetotal.

Chivas Bros. also did well in India, Pernod's second biggest market whose 4% growth would have been double that without Imperial Blue, its mega Indian whisky brand whose sale was announced last June.

Hot on the heels of Pernod came Diageo's interim results yesterday with a 4% net sales decline and a cut in the dividend which provoked an initial 6% fall in its share price. The company's new CEO, Sir Dave Lewis, or "definitely just Dave" as he insisted on being called in the post-results analysts' phone-in, explained how he was struck by the stability of the spirits market, and how closely it tracks GDP.

As with Pernod, the company's core concerns are North America and China. The former is a bigger issue for Diageo, accounting for some 40% of its business and it shrank by 6.8% over the period. But it is really a Tequila and Canadian whisky problem. As Lewis said of the US: "Our organic sales decline was almost entirely driven by Don Julio, Casamigos and Crown Royal."

Global net sales of Don Julio fell by 14%, Casamigos by 27%, and Crown Royal by 8%. By contrast, Johnnie Walker increased volume 1% and value 2%, while net sales of Buchanan's were up an impressive 11%, presumably thanks to a strong showing in Latin America where Diageo grew 4.5%, and among Hispanic consumers in the States.

Dave Lewis and Diageo's CFO, Nik Jhangiani, talked of price re-positioning in markets like the US where US$50 bottles of Casamigos are no longer in the consumer sweet spot. Trevor Stirling wonders whether people have started to question how much of that price "is the liquid, and how much is George Clooney."

Perhaps they came to the same conclusion about David Beckham and Haig Club which is rarely mentioned these days. What did get a mention by Lewis were some of Diageo's also-ran Scotch brands in the UAE. By cutting the price of VAT 69, Black & White and J&B Rare, and to a lesser extent Johnnie Walker Red, in this key Middle East market, the loss in margin was more than offset by the gain in volume.

We can expect more emphasis on these legacy blends in Latin America where, according to 'definitely just Dave', Diageo's portfolio "really only plays to the top 25-30% of the market." In the US, besides addressing the trade-down in Tequila, there will be a focus on small pack sizes and RTDs to keep brands affordable.

A presentation slide on RTDs, showed how Diageo once had 25% of the category having launched Smirnoff Ice in 2000, but now had less than 10%. A deluge of new canned and bottled single serve offerings is anticipated. Whether they will finally include Scotch RTDs on any scale, remains to be seen.

Overall, Diageo's Scotch portfolio was up 1% in net sales, versus the 5% fall from its arch rival. And yet Pernod has every chance to claw that back through its undoubted strength in India where the halving of tariffs is due to take effect in April.