Diageo and Remy Cointreau hit by China's crackdown on luxury gifts
Thursday 17 April 2014
The crackdown on extravagant gifts in China by President Xi Jinping has claimed its latest victims as Diageo and Remy Cointreau were both forced to swallow tumbles in sales
Diageo, the world’s largest drinks group, reported a “weak quarter in Asia Pacific” in the three months to April, with sales falling 19% amid a downturn at its Chinese white spirit business Shui Jing Hang.
Remy Cointreau, the maker of Remy Martin cognac, was hit even harder and warned of a 40% plunge in annual profits with annual cognac sales down 21%. Remy said sales for the year to March fell by 13.5% to €1.03 billion (£850 million) and confirmed that the reforms in China “had a negative impact on the consumption of premium spirits”.
Businesses selling popular Chinese drinks such as cognac, as well as expensive watch brands, have been hit by the crackdown on luxury gifts, with smaller items being chosen for presents to government officials. Luxury clothing brands have been less affected.
Last week the luxury giant LVMH said sales at its wine and spirits business fall 8% to €888 million for the first quarter due to these issues in China.
The Guinness and Johnnie Walker maker Diageo reported a 1.3% slump in overall third-quarter sales today but said trading was better in North America, Western Europe and Latin America. However, it had to recalculate sales in Venezuela due to the country’s falling currency.
Diageo’s chief executive, Ivan Menezes, said: “The current emerging market weakness does not reduce our confidence in the long-term growth opportunities.”
Diageo is committed to the emerging markets despite the problems for its business and earlier this week it announced plans to take a bigger slice of the Indian whisky maker United Spirits — increasing its stake from 28.8% to nearly 55%.
- 1 If I were Prime Minister: I'd give tax cuts to the rich, keep Trident, and get my football team wrong
- 2 Italian police 'reveal' what Jesus looked like as a young boy
- 3 General Election 2015: 14-year-old boy asks Nick Clegg – 'can you kill Katie Hopkins?'
- 4 University student in court for allegedly covering housemates' food in window cleaner and spit
- 5 Ryan Gosling posts tribute to 'Ryan Gosling Won't Eat His Cereal' creator Ryan McHenry
Italian police 'reveal' what Jesus looked like as a young boy
Who should I vote for? The Independent quiz matches best political party for undecided voters ahead of the general election
Mysterious 'X-Files' sounds heard miles above the Earth
Garland shooting: Isis claims attack on Prophet Mohamed cartoon contest in Texas as its first action on US soil
Met Gala 2015: Beyoncé manages to out-skimp Rihanna, Miley and Kim Kardashian combined with near-naked ensemble
In defence of liberal democracy
Over 50,000 families shipped out of London boroughs in the past three years due to welfare cuts and soaring rents
EU asylum policy is 'a direct threat to our civilisation', says Nigel Farage
The Rothschild Libel: Why has it taken 200 years for an anti-Semitic slur that emerged from the Battle of Waterloo to be dismissed?
General Election 2015: UK will be 'run for the wealthy and powerful' if Tories retain power, Labour warns
General election live: SNP suspends two members for disrupting Labour rally
iJobs Money & Business
£20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...
£25000 - £30000 per annum + benefits: Ashdown Group: An exciting opportunity f...
£215 per day: Ashdown Group: Junior Project Manager (website, web application ...
£40-50K: Guru Careers: We are seeking an experienced Software Engineer / Softw...