Newly released financials are pointing to some stabilisation in western European spirits markets. Scotch and cognac companies are expected to be the most affected by any additional disruptions caused by Russian sanctions, but the Russian government has made it clear that it has other tools at its disposal to impact trade with its adversaries. Foreign spirits suppliers from the US and the EU have faced increased scrutiny from the Russian government under the guise of consumer safety violations.
Consumer sentiment towards high-end spirits remains weak, affecting earnings for both foreign and domestic suppliers. Spirits companies are looking to develop alternative channels and alternative products to help revive sales, highlighting the growing importance of diversification. Foreign suppliers will be unlikely to see any improvement before late Q1 2015.
The US spirits market remains generally positive, and the prospects for continued economic growth should support ongoing growth in spirits volumes. Whiskey is expected to benefit from premiumisation and vodka is likely to continue to drive volume growth. Conditions remain ripe for continued US wholesaler consolidation.
Production of cachaça accelerated as inventories declined during a busy World Cup period. However the Brazilian economy continues to face headwinds as industrial production numbers continue to disappoint and overall economic activity saw contraction during the first two quarters of 2014.
For more information please contact the report’s authors:
Stephen Rannekleiv: Stephen.Rannekleiv@rabobank.com +1 718 755 9312
Elena Saputo: Elena.Saputo@rabobank.com +31 30 71 22375
For other information, please contact Rabobank press office:
firstname.lastname@example.org+31 30 21 66918
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