A sommelier pours cognac from a bottle of Rémy Martin into a glass. Photo: CFP
Foreign high-end liquor companies are seeing sales drop, partly because the Chinese central government's anti-extravagance campaign has weakened the once vigorous demand for expensive liquor.
Diageo on Thursday reported a 1.3 percent decline in third-quarter organic net sales, hurt by weakness in China and political instability in Thailand.
Rémy Cointreau warned Thursday that full-year operating profit would plunge by between 35 percent and 40 percent after cognac sales fell 32.3 percent in the fourth quarter, due to the Chinese government's crackdown on ostentatious spending.
China's major luxury baijiu (white liquor) companies also reported diving sales and net profits. Sichuan-based Luzhou Laojiao, for example, saw its net profit fall 21.69 percent year-on-year to 3.44 billion yuan ($553.8 million) in 2013, the company said in a filing released Saturday. Its revenue reached 10.4 billion yuan, down 9.74 percent year-on-year, the statement said.
Diageo, the world's largest spirits company, said sales rose in North America, Western Europe and Latin America, but tumbled 19 percent in the Asia-Pacific region in the three months ended March 31. Diageo, which sells Johnnie Walker Scotch and Smirnoff vodka, has a stake in China's Shuijingfang, a maker of baiju.
Rémy Cointreau, the maker of Rémy Martin cognac, Cointreau liqueur and Mount Gay Rum, said on Thursday that group sales reached 186 million euros ($256.8 million) in the three months to March 31.
The year-on-year sales decline was 16.1 percent, against 18.9 percent in the third quarter.
Cognac sales alone slumped 32.3 percent in the fourth quarter, having fallen 32 percent in the third quarter, which was more than analysts' average estimate of a 30 percent fall.
