MORE COVID-19 WOES: GLOBAL DRINKS GIANTS CUT TRADING ESTIMATES
By Siulan Law Mathews DipWSET
Credit: David Mathews
Global drinks giants Budweiser APAC, Diageo and Treasury Wine Estates have all revised down their trading estimates amid abrupt sales declines in China and Asia due to the COVID-19 situation.
Budweiser APAC - the independently listed regional arm of Anheuser-Busch InBev Group which owns popular beer brands like Budweiser, Corona, and Hoegaarden - said today it estimated declines of USD285 million in revenue and USD170m in earnings in January and February compared to the same time last year.
"We have observed almost no activity in the nightlife channel and very limited activity in restaurants," said Jan Craps, Co-Chair and CEO of Budweiser APAC.
However, Craps added that sales through e-commerce channels in China had "accelerated significantly" over the last two months, building on the strong double-digit growth seen in 2019.
He said that financial impact of the outbreak on their business is difficult to estimate as it depends on the containment of the virus and how fast customers resume normal operation.
"We are anticipating our customers to resume their operation in the course of the second quarter,” Craps said.
Diageo - the world’s leading distiller and owner of Guinness, Johnnie Walker and Baileys - said yesterday it expected net sales to be USD291 million to 420m lower in the fiscal year ending in June, while operating profit to drop between USD181m and USD259m.
“Bars and restaurants have largely been closed and there has been a substantial reduction in banqueting,” Diageo stated.
“As the majority of consumption is in the on-trade, we have seen significant disruption since the end of January which we expect to last at least into March. Thereafter, we expect a gradual improvement with consumption returning to normal levels towards the end of fiscal 2020,” it added.
Treasury Wine Estates, owner of the Australian Penfolds wine brand, also issued an update saying they no longer believe that the previous guidance of 5 to 10% growth in earnings for 2020 is achievable.
The company said: “consumption across discretionary categories in China has been significantly impacted through February, and this impact on consumption is expected to be sustained at least through March.”
It was said that the company’s staff are working from home in China due to “infection containment controls from the central government and provincial authorities,” and that its wholesalers, retailers, and other partners are operating under the same conditions.
Treasury said that they are not currently expecting the outbreak to affect markets outside of China, but added that it remains a possibility as the COVID-19 virus continues to spread.
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