Diageo, Pernod, Rémy: why alcohol’s giants were stumbling in 2025

Start with the companies’ results, not a single collapse narrative

The figures need dates and definitions. Diageo’s results for the year ended 30 June 2025 show reported operating profit down 27.8%. Exceptional impairment and restructuring charges, currency effects and a decline in organic operating margin contributed to that fall. Organic operating profit was down 0.7%, while organic net sales rose 1.7%. Presenting the reported profit decline alone as evidence that demand had fallen by the same amount would be misleading.

The balance sheet still mattered. Diageo reported net debt of $21.9 billion at 30 June 2025 and adjusted net debt to adjusted EBITDA of 3.4 times. Those figures measure financial leverage, not a prediction of insolvency or an investment recommendation.

Pernod Ricard’s FY 25 statement tells a different story: organic net sales fell 3.0%, with a 5.5% reported decline. Its net debt decreased, by €224 million, to €10.727 billion at 30 June 2025.

At Rémy Cointreau, net profit attributable to the group for 2024–25 was €121.2 million, down 34.4% on a reported basis. Comparing groups requires keeping reported, organic, recurring and non-recurring measures separate.

China, inventories and the timing of a slowdown

In its first quarter of fiscal 2026, reported in October 2025, Pernod Ricard recorded a 27% organic sales decline in China. This refers to the July–September 2025 quarter within its fiscal year, rather than an unspecified third quarter of the company’s financial year.

The company described weak demand, difficult trading conditions and inventory adjustments. These are overlapping pressures. They do not establish that one policy announcement, one generation or one medical treatment caused the whole decline.

Trade uncertainty also matters, but chronology must be respected. A tariff introduced in August 2025 cannot explain exports that had already fallen in April–June 2025. Earlier trade measures, changes in inventories and later tariff developments need separate evidence. A forecast of possible job or sales losses is also different from losses already observed.

Consumers are changing, but not all in the same way

Gallup’s 2025 US poll found that 54% of US adults said they consume alcohol, the lowest result in its long-running trend. That is a measure of whether people say they drink at all, not the proportion who drink regularly. It is US survey evidence, not a global measure of demand or a direct explanation of European share prices.

The generational story also needs care. Comparing young and older adults can capture age, cohort and historical-period effects together. A headline about one generation being many times more likely never to drink cannot simply be read as a forecast of how everyone will behave throughout life.

Health, cost, taste and social occasions can all influence choices. For producers, the practical challenge is to offer products people want and can afford, rather than assume that a familiar brand will always retain its customers. The pressures on suppliers such as the glass industry also belong in that wider business picture.

Health messaging and GLP-1 research are different kinds of evidence

The US Surgeon General’s advisory on alcohol and cancer was issued in January 2025. It describes a causal relationship with several cancers. It supports discussion of alcohol and cancer risk; it does not quantify how much a particular company’s sales fell because of the advisory.

A 2025 randomised trial of semaglutide involved 48 adults with alcohol use disorder who were not seeking treatment, over nine weeks. Semaglutide reduced alcohol craving and drinks per drinking day, among other measured outcomes, but did not significantly change average drinks per calendar day or the number of drinking days. These preliminary findings cannot be converted into a universal 30% reduction for everyone taking a GLP-1 medicine.

Nor does the trial show that these medicines caused bars to close or explain a large share of the industry’s financial difficulties. Those are separate commercial claims. The research is a reason to investigate a possible change in drinking behaviour, not to treat an exploratory treatment result as a market forecast.

Alcohol-free alternatives are growing within a distinct market

Soft drinks, bottled water, coffee and tea are all non-alcoholic beverages. A trillion-dollar estimate for that whole market does not measure the market for alternatives to alcoholic drinks.

IWSR’s 2025 account of its No- and Low-Alcohol Strategic Study reports 13% volume growth in no/low during 2024 across ten selected markets. It estimates 61 million additional no-alcohol consumers between 2022 and 2024 in those markets. These are defined research markets, not a census of the world; the 61 million refers to no-alcohol, rather than an interchangeable combined no/low total.

The investment interest is tangible. Diageo announced its acquisition of Ritual Zero Proof in September 2024, following an earlier minority investment. Its Ritual Zero Proof range illustrates how an established alcohol company can add non-alcoholic spirits to its portfolio. LVMH’s 2024 reporting also records a partnership with French Bloom.

That diversification creates opportunities, including sports sponsorship. It does not prove that alcohol-free drinks are displacing full-strength alcohol one for one, or that every new brand will be profitable.

A difficult year does not settle the industry’s future

The 2025 evidence supports a picture of pressure and adaptation. It does not establish an irreversible global peak in alcohol demand, an unprecedented crisis by every measure or a single cause of the companies’ difficulties.

Stock-market values, operating results, inventories and consumer attitudes answer different questions. Reading them together is useful only if their dates, populations and definitions remain visible. The challenge for established groups is real; the outcome is still open.