Distillers feel chill at China gift crackdown
A corruption crackdown by the Chinese government on the practice of "gifting" expensive spirits is hitting sales at leading drinks companies, trading updates from Diageo and Remy Cointreau have revealed.
Spirits and luxury goods have long been used to oil the wheels of Chinese bureaucracy, but fighting corruption among officials has been a priority of President Xi Jinping in his first year in office.
Diageo, maker of Johnnie Walker whisky and Smirnoff vodka, said Chinese government policies had "led to a substantial fall in net sales" at the company's white spirit subsidiary Shuijingfang.
France's Remy Cointreau, maker of Remy Martin cognac, Cointreau liqueur and Mount Gay Rum, also said it "expected to remain adversely affected by certain measures taken in China".
Sales of Remy Martin cognac fell 8.3% in the quarter to September with wholesalers still looking to offload unsold stock. Remy generates about 40% of its operating profit from cognac sales in China.