CHINA: Pernod Ricard, Remy Cointreau risk sales hit from corruption crackdown - analyst
China is stepping up its efforts against corruption
A new anti-corruption programme has been launched in China since Xi Jinping took over as head of the Communist Party last November. The country's Central Military Commission has already issued a ban on liquor and luxury banquets at receptions for high-ranking officers and the clampdown is expected to be ramped up this year.
In a note today (8 February), Deutsche Bank said that imported spirits are unlikely to be targeted specifically in a crackdown but they “will get caught in the crossfire of reduced entertainment and less gift-giving more generally”. “If there is an impact, not only will volume growth decelerate but mix will shift negative, pricing will struggle and there could be destocking too,” the note said.
It added: “Investors appear to be very relaxed about downside risks to the premium spirits market, which seems at odds with the power and determination of the Chinese Government. Whilst we are convinced that Cognac and Scotch are not being targeted specifically, we struggle to see how they can avoid being impacted.”
Deutsche downgraded both Remy and Pernod to a "sell".
According to Deutsche estimates, Remy is most exposed in China with the country accounting for around 40% of group sales. For Pernod, China makes up around 10% of group sales, Deutsche said.
Over the last 10 years of rapid acquisitions, Pernod Ricard has built a strong portfolio of premium brands on a global scale. Most of its brands enjoy a leading position in international markets. The ...
Alcoholic Drinks in Denmark industry profile provides top-line qualitative and quantitative summary information including: market share, market size (value and volume 2007-11, and forecast to 2016). T...
Alcoholic Drinks in New Zealand industry profile provides top-line qualitative and quantitative summary information including: market share, market size (value and volume 2007-11, and forecast to 2016...
Alcoholic Drinks in India industry profile provides top-line qualitative and quantitative summary information including: market share, market size (value and volume 2007-11, and forecast to 2016). The...
- Comment - Heineken's 'No' Cuts SABMiller Options
- Irish whiskey eyes a slice of Scotch's global pie
- SABMiller spurned by Heineken: The start of the en
- Guinness: A Great Day for St James's Gate
- Wines of the Beautiful South Ups its Game
- Patron Spirits' Patron Citrónge Lime
- Wm Grant CMO to head Orangina Scweppes Int'l
- Heineken rejects SABMiller purchase proposal
- Scottish leader speaks out over Scotch whisky
- SABMiller, Heineken silent on takeover offer talk