Sales of cognac and other luxury drinks in China may drop by as much as half as authorities clamp down on karaoke bars, bath houses, nightclubs and similar establishments, Apple Daily reported Tuesday, citing analysts.
Since February, police have stepped up inspections of establishments that feature female staff entertaining male patrons, where as much as 30 percent of Cognac sales in China are made, according to the newspaper.
Cognac sales in China reached 27 million liters in 2012, more than double the level in 2007, according to Euromonitor. Ninety-five percent of the market is split between LVMH, Pernod Ricard and Rémy Cointreau.
Pernod Ricard said about 12 per cent of its 8.6 billion euro (US$11.86 billion) annual net sales came from China and about one-fifth of that was from nightclubs and similar establishments, adding that sales in the country have seen a double-digit decline in the year to date.
Bernstein Research said in a report the police crackdown started in southern China where cognac consumption is highest.
The good times when high-end liquor sold for as much as US$2,000 per bottle in China could be over, although the spirits market will continue to grow in the medium term, a Nomura analyst was quoted as saying.
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