Diageo, the maker of Johnnie Walker whiskey and Smirnoff vodka, said trade in Chinese bars and restaurants has resumed in parts of the country as it cautiously exits the lockout.
Distillers and brewers around the world are turning to the world’s largest beverage market, where the coronavirus pandemic began, for signs of a return to normalcy after dozens of countries have imposed strict social distancing measures for fight the virus. These measures have virtually ended the profitable trade in alcoholic beverages in bars and restaurants.
“In mainland China, we are starting to see a very slow return of consumption to the market, while restaurants and bars have started to reopen gradually,” said Diageo, who is the majority owner of the maker of Shui Jing Fang, a popular brand of baijiu. , The national spirit of China, distilled from cereals or rice.
Diageo withdrew its predictions for fiscal 2020 due to coronavirus on Thursday after bars and restaurants have been mainly closed in Europe, where drinking outside the home accounts for about half of Diageo’s business, and to states United States, where it represents 20%. of his spirits activity.
In China, the lockout has officially been lifted for the 11 million residents of Wuhan, where the pandemic started this week after two and a half months.
Rival distiller Pernod Ricard said last month that he had seen “very limited business” in China in February and March, and expected a “slow April recovery.”
Bernstein beverage analysts said this week that restaurants across China were reopening: they polled a sample of 240 restaurants in major cities, including Beijing and Shanghai, and found that 90% were open, against 63% on March 16.
“During the peak hours of dinner on Friday and Saturday (6 pm-7pm), most of the restaurants we surveyed were full and there were, on average, 25 groups waiting for tables,” analysts said. “The apparently dynamic restaurant trade bodes well for the resumption of beer, wine and baijiu consumption, in our opinion.”
Travel restrictions have, however, been re-imposed in parts of China for fear of a second wave of infection.
Diageo said Thursday it has halted share buybacks and cut costs due to the global impact of the coronavirus.
The first phase of a share buyback program ended in January after £ 1.25 billion in purchases, and the company has said it will not buy more for the rest of its fiscal year, ending in June. Interim dividends of 27.41p per share will however be paid this month as planned.
The company boosted liquidity by issuing £ 1.9 billion of new bonds last month, and said it “will continue to execute with discipline and invest prudently to ensure that we are well positioned for a recovery.” of consumer demand. “