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Declining U.S. vodka sales are bad news for Absolut brand

August 23, 2015, 6:36 PM UTC

As cocktail culture continues to grow in the U.S., so does the alcohol market; unfortunately for Pernod Ricard SA, owners of Absolut, millennials’ tastes are shifting from vodka to bourbon.

This change has not yet affected the company’s profits, as it’s expected to post a 7.9% increase in sales and a 30% increase in net income on Thursday, the Wall Street Journal reports. It helps that the company owns various alcohol brands aside from Absolute, including Jameson Irish whiskey and Martell cognac.

Liquor analyst Trevor Stirling tells the Journal that this shift away from vodka is “not universal gloom and doom, but they’re in a tough situation.”

Between 2010 and 2014, vodka consumption declined almost 2%. In the same period, whiskey sales rose 2.7%, and American bourbon and Tennessee whiskey both climbed nearly 17%. In the U.S. alone vodka sales went down 0.3%, whiskey went up 2.7%, and American bourbon and Tennessee whiskey rose 7.4%.

Half of Pernod’s U.S. sales come from Absolut, sales volumes of which declined 3.3% last quarter.

Diageo PLC is currently the world’s top liquor company. If Pernod wants to surpass Diageo, it’ll have to “find more pours in the high-value U.S. market” either by reinventing the Absolut brand, which Stirling says can take between three and five years, or via acquisitions.

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