(Bloomberg) -- The head of Pernod Ricard SA said he expects global sales of its pricey booze to improve this quarter despite continued weak demand in its top markets of China and the US.

The French spirits maker, whose brands include Absolut Vodka and Martell Cognac, said sales were flat in its most recent quarter at €2.3 billion ($2.5 billion) as US retailers destocked and Chinese drinkers remained cautious. That missed analyst consensus estimates of 2.8% growth and €2.5 billion in sales.

The company said volumes rose 1% during the quarter, marking the first volume growth in a year. 

“Increased momentum that we’re experiencing in the rest of the world, with the exclusion of China and the US, we see that as pretty broad-based,” Chairman and Chief Executive Officer Alexandre Ricard said in an interview.

Pernod shares traded 1.4% lower early Thursday in Paris. They’re down 34% for the past 12 months.

Pernod and other premium distillers have been facing weak sales in the US due to high stock levels as drinkers cut consumption of pricey spirits after soaring demand during the pandemic. Pernod has raised prices to offset lower volumes and higher input costs.

Keeping Forecast

Pernod kept its forecast of overall flat sales for the year. It said it expects organic operating profit from recurring operations to grow by 1% this year.

A rebound in China has been weaker than expected following an anti-dumping probe into French brandy, including Cognac. Chinese authorities began the investigation after the European Union began looking into its support for the electric vehicle industry.

What Bloomberg Intelligence Says:

Pernod must deliver low- to mid-single-digit organic sales growth in 4Q, vs. a flat performance in 3Q, to achieve its broadly stable target for the year. That will be tough as about 30% of revenue is hamstrung by excess US inventory (20%) and weak Chinese consumer sentiment.

— Duncan Fox, BI consumer-goods analyst

Pernod’s Slow 3Q Recovery Must Accelerate to Meet Target: React

Pernod said sales in India, the company’s third-biggest market, grew 8% in the quarter, outpacing 4% growth in the first half of the year. Travel retail purchases in Japan were also strong and helped offset the weak performance in the US and China.

Ricard said he expects sales in China to remain weak in the fourth quarter and in line with the first nine months of the company’s fiscal year. 

Pernod Ricard had previously said it expects low single-digit organic operating profit growth for the year.

(Updates throughout with CEO comments)

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