Olly Wehring

(Don't) Blame it on the weatherman

By: Olly Wehring - 17 August 2007 17:06

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It’s a very British obsession, I know, but the weather really has been at the forefront of the minds of almost all of us over here of late. Indeed, across Western Europe in general, the lousy June and July have even been making headlines.

Here at just-drinks, we’re no exception. As the first half - and second quarter – results come pouring in, the excuses are coming thick and fast when performance hasn’t been as good as expected. And the most popular excuse? You guessed it – the sun hasn’t had his hat on.

Scottish & Newcastle was a class example of this last week, when it warned that the poor weather so far this summer had led to its Western European markets of the UK and France experiencing “significant difficulties in two of our three key summer trading months”.

There is probably further bad news on the horizon for the beer group, as July’s floods have coincided with the arrival of the smoking ban in the UK to further dent growth in the second half.

I remember a few years ago, discussing the effect of the weather on drinks companies with a rather verbose analyst. He dismissed the use of a bit of rain as an excuse – and he was rather persuasive.

“Certainly, people drink more of certain beverages when its hot outside,” he said, “but if you’re operating in markets where it’s not always hot outside, then how can you expect growth year in, year out?”

Not only that, he said, but a balanced portfolio should allow drinks companies to sell different products to consumers whatever the weather. “It’s just not a viable excuse anymore.”

S&N is not the first group to fall foul of the weather this year in Western Europe – look at poor old C&C – and it will not be the last either. But there is little doubt that for drinks groups with serious international aspirations he has a point. Businesses of this size hedge against almost everything else – should we not be looking to ways to mitigate bad weather?

What do you think? I’d welcome your thoughts in our forums section – because he almost convinced me.

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