Major spirits companies such as Diageo, Pernod Ricard, and Rémy Cointreau are grappling with a volatile mix of economic and regulatory challenges in 2025. A surge in inflation, higher tariffs across global markets, and the growing popularity of sober living are creating strong headwinds for the once-booming alcohol industry.

In recent months, global demand for premium spirits has weakened, especially in key markets like the United States and China. Rémy Cointreau, known for its premium cognac, has already withdrawn its long-term growth outlook and announced an internal restructuring, signaling how deeply the turbulence has shaken the sector.

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Tariffs and Trade Pressures Cut into Profits

New and extended tariffs on imported spirits are reshaping trade flows and increasing the cost of doing business. For example, Rémy Cointreau noted that retaliatory tariffs from China could cut up to 65 million euros from its operating profit in fiscal year 2025–26.

These financial pressures are pushing global spirits makers to reconsider supply chains, pricing strategies, and long-term expansion goals. Diageo, which owns brands like Johnnie Walker and Tanqueray, has also adjusted its revenue expectations after acknowledging that its global sales momentum is weakening.

Shifting Consumer Preferences

Consumer behavior is also evolving. Younger demographics, especially Gen Z, are drinking less or turning to no- and low-alcohol alternatives. This trend, combined with inflation, is dampening demand in what were once high-growth markets.

Pernod Ricard, the maker of Absolut Vodka and Chivas Regal, has acknowledged that changing consumption patterns and inflation-driven pricing fatigue are weighing on volumes.

The rise of health-conscious lifestyles, wellness trends, and increasing scrutiny around alcohol consumption are forcing legacy players to diversify product lines, invest in innovation, and embrace alternative offerings like ready-to-drink and low-alcohol formats.

Strategic Shakeups and Cost Control

To manage the fallout, companies are turning inward. Rémy Cointreau has halted its 2030 growth targets and is expected to focus on streamlining operations. Diageo and Pernod Ricard are making similar internal adjustments, including restructuring leadership and reevaluating marketing investments.

Suspending dividend payouts and boosting ad spending to revive brand loyalty are among the strategies considered to balance short-term pain with long-term brand equity.

CNBC – Global Spirit Makers Face Cocktail of Challenges
https://www.cnbc.com/2025/06/07/diageo-pernod-remy-global-spirit-makers-face-cocktail-of-challenges.html