Chinese abstinence hits drinks firms Diageo, Remy

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China’s crackdown on corruption, and with it luxury gift-giving, has again hit quarterly sales of spirits, European drinks groups Diageo Plc and Remy Cointreau SA  said on Thursday.
In contrast, brewer SABMiller Plc (SAB.L) said sales of lager in the last three months jumped 10 percent by volume in China, one of the markets that helped the maker of Peroni and Grolsch beers post a 6 percent rise in net sales by value, up from a 2 percent rise the previous quarter.
“We see this as a solid result in tough market conditions,” said Numis Securities analyst Wyn Ellis.
Stifel Nicolaus analyst Mark Swartzberg also said SABMiller was “navigating better than Diageo”.
Diageo, the world’s biggest spirits company as well as the maker of Guinness and Red Stripe beers, posted a 3.1 percent rise in sales for its first quarter, ended September 30, which analysts said fell short of their expectations for a 4 percent rise. Sales rose 5 percent in the previous quarter.
Meanwhile Remy, which generates 40 percent of its operating profit from cognac sales in China, said wholesalers were reducing inventories after sales fell short of expectations during the Chinese New Year.
Remy said revenue declined 5.3 percent on a like-for-like basis to 294.4 …

Source: BusinessDay

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