French cognac makers won’t be toasting the Chinese New Year. After several years of double-digit growth, cognac sales in China have tanked as President Xi Jinping clamps down on conspicuous consumption.
Shares in Rémy Cointreau (RCO:FP), maker of Rémy Martin cognac, plunged nearly 10 percent on Nov. 26 after the company said it expected a “substantial double-digit decline” in profits because of weak Chinese sales.
The Chinese New Year, which falls on Jan. 31 in 2014, ordinarily would bring a sales windfall, with Communist Party leaders hosting cognac-soaked banquets and giving each other bottles costing $200 and up. But, Rémy Chief Executive Officer Frédéric Pflanz told Bloomberg Television, “We don’t necessarily expect a bettering of the situation” for the next few months. Chinese distributors are sitting on large, unsold stocks and aren’t placing new orders, he said.
via For Cognac Makers, the Chinese Party is Over – Businessweek.
CHINDIA ALERT: You'll be living in their world, very soon 