Blog: Europe - the troublemaker?
Olly Wehring | 3 September 2007
A brace of figures last week has highlighted the tough times currently being weathered (no pun intended) of late by drinks companies in Europe.
While Diageo saw its full-year results held back somewhat by Europe, and the UK in particular, InBev warned that volumes in the UK in its second quarter took a 10.7% dip, which "implied some share loss".
Coinciding with tricky conditions in Europe, came a report last week of the potential on offer in the so-called BRIC economies of Brazil, Russia, India and China. The four developing countries have long been seen as potential cash-cows for every drinks company out there.
So, have they all given up the ghost on Western Europe? Of course, they haven't. But, as Diageo CEO Paul Walsh told just-drinks last week: "I don't make irrational investment decisions just to look good in the UK. It's nice, but it's not essential."
With the spotlight moving away from the mature markets, and attention centring on the BRIC economies, companies should still keep an eye on the spinning plate that is Europe. Whilst there are pressures of late on consumers in the UK, premiumisation remains an important driving force in the drinks market here across many of the categories and one poor summer will not put an end to that.
Furthermore, as we have argued on these pages before, investment in the BRIC and emerging markets whilst promising higher rates of ROI, also carry with them far more risk. The political situation in Russia, the fear China’s economy could still overheat, economic uncertainty in Brazil and the regulatory barriers to trade in India mean continuing stellar growth is far from assured.
Some people in India believe alcohol should be more difficult to purchase. Last month, the state of Bihar halted all alcohol sales as its chief minister made good on an election promise. ...
Greetings from Zurich. Here as a guest of Heineken's Amstel brand, I'm due to sit down later today with the group's senior global director for international brands, Walter Drenth....
Drinks companies spend a lot of money on trying to predict trends. At last night's Worshipful Company of Distillers City debate, any strategists in the audience got a bit of forecasting for free....
I'll admit to being partial to an Aperol Spritz now and again, more usually in the summer months, sitting outside, shades on, slowly turning more golden/rusty....
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