LONDON: The global spirits industry is drowning in a $22 billion inventory glut, with top producers like Diageo and Pernod Ricard struggling to manage record stockpiles. This oversupply crisis stems from a post-pandemic demand slump and over-production during the 2021-2022 boom, reported Financial Times. Five of the biggest listed alcohol producers—Diageo, Pernod Ricard, Campari, Brown Forman and Remy Cointreau—are sitting on $22bn worth of ageing spirits, the highest level of inventory in more than a decade, according to their financial reports. A report by Madeline Speed in the Financial Times found that high inflation and reduced disposable income curbed premium spirit sales. French cognac maker Remy Cointreau’s inventory value is now nearly double its annual revenue and almost equal to its entire market capitalisation. The mounting stocks have aggravated the debt burdens and are threatening a price war. “The build-up of inventories is unprecedented. In 2021 and 2022, everyone lost the run of themselves and thought [demand] would go on like that forever,” said Bernstein analyst Trevor Stirling.
According to the Financial Times, the cost of storing and producing this excess stock has pushed debt-to-earnings ratios (leverage) well above target levels for giants like Diageo and Pernod Ricard. It further said that some have argued the drop in alcohol consumption is linked to societal changes, primarily the rapid adoption of weight-loss drugs like Wegovy and Ozempic, and a greater focus on health and wellbeing. According to the Financial Times sales, titles of the French brandy have been hit hard, with exports falling 72 per cent year-on-year in February 2025, according to the Bureau National Interprofessionnel du Cognac (BNIC), a trade body. It mentioned that China imposed a 34.9 per cent duty on European cognac last year, amid trade tensions with the EU, but exempted Pernod Ricard, LVMH and Remy Cointreau if they agreed to sell at a minimum price. At Remy Cointreau’s half-year trading update in November, a 76 per cent drop in organic cognac revenues was reported. Chief executive Franck Marilly suggested that elevated supplies of eau-de-vie meant prices would have to fall. “We’re in a different world,” Marilly said.
