Sagging Spirits

Written by The Financial Express | Updated: Apr 21 2014, 09:18am hrs
Remy Cointreau, maker of ultra-premium cognac Louis XIII, and Diageo, maker of rival Hennessey, have both reported slipping sales figures, following which their share prices have also fallen.

Interestingly, both seem to have been hit by Chinas anti-extravagance policya bid to curb corruption and a culture of gift-giving among public officials, often involving high-end liquor. Cointreau has admitted as much, pinning its 13.5% decline in sales on the Chinese clampdown, saying it had a negative impact on the consumption of premium spirits. Diageos figures hint at the samesales in the Asia Pacific crashed 19% in the three months to March 31, 2014, while it grew in North America,

Russia and Latin America.

Left high and dry by the Chinese, liquor giants are hoping that India helps drown out their sorrows. Diageo, for one, is letting a lot ride on the Indian marketon Tuesday, it put up a $1.9 billion bid to double its stake in the Indian liquor giant, United Spiritsas it sees a sizable chunk of tipplers in the countrys growing middle-class. Besides, according to a CNBC report quoting market research firm Mintel, the liquor makers are readying to raise a toast to Indias next government which they hope will bring down tariffs on imports, giving a leg up to their premium drinks markets. And who knows, given Indias seemingly entrenched gift-giving culture, the country could just be the market to succeed China.