January 12, 2009
just-drinks.com editor's weekly highlights
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Last week provided a New Year health check for wine giant Constellation Brands, which signalled that it had entered a new phase in its development. Falls in quarterly net profit and sales, though largely in-line with expectations, prompted CEO and president Rob Sands to announce an inward focus for the group.
Key priorities in Constellation's fiscal fourth quarter and beyond will be reducing debt, "eliminating" underperforming business lines and "bringing home the bacon" on previous acquisitions, Sands said.
Fears that the economic downturn will hit growth in emerging markets, meanwhile, were given extra weight by an independent report from China, released last week to just-drinks. In India, however, an 18% volume rise in the year-to-date for United Spirits has put the firm in bullish mood for the year ahead.
Back in the western world, the UK business sector ended the week sounding cautious tones, after the Bank of England cut interest rates by 0.5% to 1.5%, the lowest level in more than 300 years of the Bank's existence.
As the recession bites, then, it's little wonder that, here in the UK, at least, consumers are turning to home brewing, while one of the pub chains does all it can to entice consumers back into boozers.
The rollercoaster just keeps on rolling.
Until next time...
Olly Wehring, Managing Editor
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Constellation Brands posted a 30% drop in third-quarter net income this week and lowered its profit outlook, hit by the effects of the global downturn on its major markets. Michelle Russell assesses reaction to the results in the investment community.
Most certainly the biggest story in the spirits industry, like virtually all other industries, was the economic downturn that struck the world this year. Despite the claims of many spirits companies, that they offer “affordable luxury” with their products, trading down seems to be here to stay for the foreseeable future. For the wine industry, 2008 was not a year of huge deals and seismic shifts in the corporate landscape. Instead, the downturn made its presence felt, accentuating the pressures already affecting businesses all around the world. Whilst in years to come, many observers will look back on 2008 as a watershed for the global brewing industry. After an already sustained period of consolidation, the trend appeared to reach its zenith this year, with what could safely be termed a ‘mega-consolidation’. And in looking for issues which have dominated the soft drinks pages over the last year, one need really go no further than, yes, you've guessed it, the state of the global economy. Review the year that was, with just-drinks' top contributors, sector by sector.
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