PERNOD Ricard has posted a first quarter sales decline, as the performance of deluxe Scotch continues to be dented in Asia by "anti-extravagance measures" adopted by the political leadership in China.
The owner of Paisley-based Chivas Brothers, whose brands include Ballantine's, Chivas Regal and Beefeater gin, has reported sales of €2.013 billion (£1.25bn) for the quarter - an organic sales decline of 1% on the same period last year.
The distiller said its performance had been undermined by a slowdown in emerging markets influenced by "high comparatives" in 2012/13, which had seen its major markets of the US, China and Russia report organic growth of 16%, 18% and 28% respectively.
Pernod said unfavourable exchange rates led to reported sales decreasing by 9%, which it said would impact on profit from recurring operations by €130 m for the full year.
The company's top 14 brands posted an organic sales decline of 5% for the quarter, and a volume fall of 1%.
In China, where the political regime continued to impact on activities such as banqueting and gifting, sales of Ballantine's and Martell Cognac declined, contributing to a negative sales mix of 6%.
But the firm noted pricing had held up well, increasing by 2% for the quarter.
And while sales of its most prestigious brands were affected by the austerity measures, products marketed at a lower premium had shown better "resistance" to the prevailing climate.
Pernod's sales across Asia and the rest of the world showed an organic sales decline of 6%. However this was offset by a robust performance in Europe, which saw a 3% rise.
A "very good" first quarter was reported by the Paris-based company for the United Kingdom and Germany as organic sales grew by 2% across western Europe.
The star performer was France, where factors such as good summer trading and an improvement in the on-trade drove a 5% increase in sales. Strong performances in France were recorded by rum brand Havana Club, which reported sales growth of 25%, and sales of its Absolut vodka were 16% higher.
Pernod Ricard chief executive Pierre Pringuet said: "Our first quarter was adversely affected by the slowdown of emerging markets and unfavourable technical effects.
"However, we remain confident in the diversity of our portfolio and the strength of our distribution network.
"We anticipate organic growth in full-year profit from recurring operations between 4% and 5%."
A note from broker Investec declared the spirits firm's opening quarter performance as a "material miss to expectations and consistent with our bearish thesis on the spirits sector".
Investec noted the 1% decline at Pernod Ricard in the first quarter compared unfavourably with a consensus expectation of a 1.9% rise. And it said although Pernod's full-year profit forecast was "only marginally below" the analyst's 5.6% expectation, it expects to downgrade its numbers and has restated its recommendation to sell.
The analyst said: "While the sales competition gets a lot easier in quarter two, and tough China comparisons get lapped in H2 (second half), we see Pernod as having a constrained top line outlook for FY 14 (full-year 2014) by historic standards."
Investors took the news from Pernod Ricard in their stride, and shares closed the day unchanged at €86.70.
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