Chivas Brothers has declared its annual sales would have risen had it not been for its withdrawal from Russia, as the Scotch whisky giant's performance “stabilised” following a challenging start to the year.

The Dumbarton-based distiller, which is part of French drinks company Pernod Ricard, reported a 1.6% fall in net sales for its 2024 financial year, after a resurgent second half failed to fully offset a sharp decline in the opening six months.

However, it said excluding Russia sales were up 1.4% compared with the previous year.

Chivas said its performance in the year to June 2024 had stabilised amid a “complex geopolitical landscape”. The industry has been thrown into upheaval following “two historic years”, which had seen demand soar after economies around the world reopened following Covid restrictions.

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Chivas said it returned to growth in the second half of its financial year, with sales surging by 6% between July and December after tumbling by 5% between January and June. But the second-half resurgence was not enough to prevent sales dipping for the full year.

Parent company Pernod, which also owns brands such as Absolut vodka and Jameson Irish whiskey, reported net sales of €11.6 billion for the year, an organic decline of 1%, as sales tumbled in the US, Europe and China.

Speaking to The Herald, Jean-Etienne Gourgues, chairman and chief executive of Chivas, stated that the performance of the whisky business had been “robust” in difficult conditions. And he noted that, excluding Russia, net sales would have grown by 1.4% over the year, “which is quite a solid result”.

Chivas employed several hundred people in Russia, and ceased exporting its international brands to the country at the end of April 2023, following a “complicated” exit process.

A number of Scottish firms have closed down operations in Russia in light of the country’s full-scale invasion of Ukraine in early 2022, which led to a wide range of economic sanctions being imposed on the country.

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As well as highlighting the impact of its exit from Russia, Chivas reported challenges in North America, and Central and South America, where sales tumbled by 19% and 8%, amid “category softening”.

However the distiller, which makes brands such as Ballantine’s, Chivas Regal and Royal Salute, said these reverses were largely offset by expansion in markets such as Africa and the Middle East, where sales increased by 35%, making it the top contributor to growth over the period.

The distiller also reported positive performances in Western Europe, with sales up by 5%, and throughout Asia: sales surged by 22% in Japan and declined by 1% in Greater China, where Chivas said the market “continued to stabilise”.

Mr Gourgues said it had been a “year of two halves… with ups and downs and a lot of volatility in the market”.

The performance by Chivas across the Atlantic provided further evidence of the wider  Scotch whisky’s struggles in North America, where exporters have struggled in recent months after two boom years that immediately followed the pandemic.

Mr Gourgues said there had been a “super cycle” in North America leading to a rise in prices, which in turn has led to an “inventory build” in the “very structured” retail market that is taking time to unwind.

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Central and South America were “more of a mixed bag”, he added, explaining that these are markets which have “ups and downs”. Mr Gourgues noted that Brazil is “starting to accelerate” and returned to positive territory last year. 

“Again, the first half and the second half of the year had a different result,” he said. “But at the end of the day we started to see a recovery in the second half which has led to positive growth in Brazil.”

Chivas said its Prestige range had grown ahead of the rest of its portfolio for the third year in a year. Royal Salute saw net sales increase by 5%, taking it to a “historic high”, which Mr Gourgues declared has given the firm “confidence for the future”.

Asked to comment on the outlook for the company, Mr Gourgues said there continues to be “volatile” inflation in some markets, which means the firm has to show “hyper agility”.

He said Chivas does not provide specific guidance, but expects to maintain the growth it recorded in the second half of last year. “It won’t be an easy year… but we hope to deliver similar patterns,” he said.

Meanwhile, Scotch whisky distillers face the prospect of import tariffs being reintroduced in North America should Donald Trump win the US election in November. Tariffs imposed on imports of single malt Scotch whisky during Trump’s spell in office between 2017 and 2021 are understood to have cost the whisky industry hundreds of millions of pounds in lost imports.

Mr Gourgues said any impact of further tariffs would not been seen until the second half of the company's current year, should they be reintroduced.