'Discount' Ballantine's vs. 'Cost-Cutting' Johnnie Walker ... Strategies Diverge Amid Strong Dollar

Pernod Ricard's Price Cuts Boost Sales
Surge in Non-Operating Expenses Cuts Net Income
Diageo Improves Profitability Despite Declining Sales
Cut Costs Even on Transportation... Everything but Labor Costs

Ballantine's & Johnnie Walker

Pernod Ricard Korea and Diageo Korea, the two leading imported whisky companies, have posted contrasting results over the past year. As the won's weakness and declining alcohol consumption took their toll, Pernod Ricard's strategy of expanding sales came at the expense of profitability, while Diageo tightened its belt and strengthened its financial footing despite a second consecutive year of falling sales.

According to an audit report released earlier this month by Pernod Ricard Korea, the company's sales totaled KRW 124.2 billion from July 2025 through June 2026, up about 2.9% from KRW 120.7 billion in the previous period, from July 2024 through June 2025. Operating profit fell 4.3% to KRW 14.4 billion over the same period.

Prices of single malts cut by up to 13%

In December 2025, Pernod Ricard strategically revised its pricing policy for key single-malt whiskies, cutting the ex-distillery prices of Ballantine's Glenburgie 12- and 15-year-old and The Glenlivet 12- and 15-year-old by up to 13%. The strategy was aimed at easing the price burden on consumers and expanding access to luxury whisky experiences, rather than prioritizing short-term profitability.

However, the price cuts had little effect. Sales rebounded slightly, but operating profit declined as the weak won drove up whisky import costs. Pernod Ricard's cost of sales rose 11%, from KRW 37 billion to KRW 41.1 billion, leaving gross profit down 0.8% at KRW 83 billion. Selling and administrative expenses, including labor costs, fell just 0.04% to KRW 68.6 billion, effectively remaining flat.

Net income plunged in particular, due to a sharp increase in non-operating expenses. Non-operating expenses totaled KRW 10.8 billion, up 48.8% from KRW 7.3 billion in the previous period. Miscellaneous losses accounted for the largest share, at KRW 9.8 billion, while foreign exchange transaction losses also rose 45%, from KRW 46.45 million to KRW 69.58 million. Foreign currency translation losses, which are accounting losses, surged 420%.

Diageo cuts all costs except labor expenses and protects profitability

Diageo, which sells Johnnie Walker and other brands, successfully protected its profitability by improving its cost structure, including through expense reductions, despite declining sales. According to its audit report, Diageo's sales fell 4.3% to KRW 153.7 billion over the same period, but operating profit rose 14.4% to KRW 10.7 billion as selling and administrative expenses declined. Those expenses fell about 7.1% from the previous period to KRW 80.8 billion. The company is believed to have improved profitability by reducing most costs, including promotional and marketing expenses. In particular, it cut training expenses by more than 60% and insurance premiums by 50%.

Inventory management also helped the company cushion the impact of the weak won. Its cost of sales fell 3.29% from the previous period, while purchases of goods declined by more than 12%. As a result, foreign exchange transaction losses fell from around KRW 900 million to KRW 700 million.

In the previous period, the company recorded a net loss of KRW 11.1 billion, partly due to non-operating expenses, including additional customs duties. This time, it swung to a net profit of KRW 8.9 billion. A key factor appears to have been the steep decline in non-operating expenses, from KRW 24.1 billion in the previous year to around KRW 1.6 billion.

Diageo's cost-cutting efforts have continued into the second half of 2026. The company implemented a voluntary retirement program in July, following the appointment of CEO Andrew Orton. This workforce restructuring comes about two years after Diageo implemented an Early Retirement Program (ERP) in early 2024.

A Diageo Korea representative said, "Last year, we responded flexibly to a challenging market environment and rapidly changing consumer trends, focusing on strengthening our brand competitiveness and on business operations and resource allocation to support sustainable growth. Building on our solid financial health, we will continue to closely monitor changes in the domestic market and work continuously to improve satisfaction among consumers and customers."

Meanwhile, South Korea's whisky market is facing a double blow: sluggish consumer spending amid high prices since the COVID-19 pandemic and a growing reluctance to drink. According to Korea Customs Service trade statistics, whisky imports totaled 12,205 tons from January through August 2026, down 22.1% from the same period a year earlier. Imports have declined since peaking at 30,586 tons in 2023, falling to 27,441 tons in 2024 and 22,582 tons in 2025.

This content was produced with the assistance of AI translation services.