LONDON-- Diageo PLC on Thursday said weakness across emerging
markets led to a fall in full-year profit as the U.K. liquor maker
suffered from a huge drop in demand in China, the world's biggest
liquor market.
The maker of Johnnie Walker whisky and Smirnoff vodka reported
net profit of GBP2.25 billion ($3.81 billion) for the year to June
30, compared with GBP2.45 billion a year earlier, on revenue 8.5%
lower at GBP13.98 billion.
"Emerging market weakness, often currency related, but also
including some specific issues, such as the anti-extravagance
measures in China, has led to weaker top line growth," said Chief
Executive Ivan Menezes.
Diageo is the latest major spirits company to take a hit on
China, nearly two years after the Chinese government banned
extravagant gift giving and scaled back state-funded banquets.
Diageo acquired Shui Jing Fang, a Chinese producer of baijiu-a
spirit made of sorghum-in 2013. The company said sales of Shui Jing
Fang declined 78% in the year. But for the first times, some of
Diageo's international brands felt the heat in China, with sales of
Johnnie Walker Black Label falling 28%.
French giants Rémy Cointreau SA, the maker of Rémy Martin
cognac, and Pernod Ricard SA have both issued warnings in the last
year on continued weakness in China, the world's biggest liquor
market by volume.
Write to Peter Evans at peter.evans@wsj.com
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