A major clamp-down by Chinese President Xi Jinping on extravagant business entertainment has put a serious dent in global cognac sales, with Diageo, Pernod Ricard and Rémy Martin in particular feeling the pinch.
Beijing has closed almost 2,500 karaoke and hostess bars in a recent effort to curb private corruption. The Chinese government has recognised the role the "erotic sector" plays in corporate wining-and-dining, and it is estimated that these venues account for as much as 30% of cognac sales in the country. Or at least they did.
Pernod Ricard has reported a "double digit decline" in this sector which comprised roughly 20% of their Chinese business. Diageo hasn't fared much better, taking a 19% hit at its local business Shui Jing Hang, and Rémy has reported an alarming 21% downturn in cognac sales alone.
Although the full impact of China's "austerity policy" remains to be seen, it seems that the glory days of the country's ultra premium booze market may be behind it. For the time being at least, the Chinese are going to have to slum it in the 'premium' category.