WARC, 21 October 2013
BEIJING: Luxury drinks giants Diageo and Rémy Cointreau have
reported reduced sales in China in a further sign that the government's
crackdown on gift-giving and ostentatious displays of wealth by state officials
is hitting the luxury goods sector.
Diageo, the world's largest spirits company, said overall
sales growth in the Asia-Pacific region slowed to 0.6% in the quarter to the
end of September 2013, down from 2% in the same period last year, and linked
the impact to China's clampdown.
This included a sharp fall in sales of its Shui Jing Fang
rice spirit brand, the Wall Street Journal reported, which Euromonitor has
estimated represents half of the country's alcohol sales.
However, the company said sales of its super-premium and
ultra-premium Scotch whisky brands remained buoyant.
Echoing concerns about how Diageo is faring in China, French
drinks company Rémy Cointreau also attributed "certain measures taken in
China" to a fall in sales.
It said overall global sales fell to €294.4m over the second
quarter, dragged down by a sharp fall in sales of its key Rémy Martin cognac in
China, which usually accounts for 40% of its operating profit.
Sales have been in decline partly because local wholesalers
have run down large cognac inventories amid sluggish demand during the Chinese
New Year sales season.
Chinese New Year, which takes place on January 31 next year,
will be crucial in reviving the fortunes of the spirits companies, said Trevor
Stirling, an analyst at Sanford C. Bernstein.
But he warned the "the squeeze continues"
regarding the clampdown on gift-giving and Rémy Cointreau confirmed it expected
China to depress sales in the next quarter.
By contrast, Peroni-brewer SABMiller reported strong growth
of 14% in China, where its CR Snow joint venture is the country's largest beer
brand.
Data sourced from Wall Street Journal; additional content by
Warc staff
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