China's anti-corruption drive is really hitting Scotch Whisky

Xi Jinping makes problems for luxury goods.

A more unusual, but strong, market force is at work in China: an anti-corruption drive led by the new president, Xi Jinping. The giving of expensive luxury items to government officials has been a standard part of bureaucratic and business life in China, and has contributed in part to the dramatic growth in revenues and profits for multinational luxury goods companies operating in the country. Mr Xi however has swept in with a determination to stamp out showy bureaucracy and waste, and high end restaurants have suffered as official banquets have been cancelled and luxury local liquor makers have seen demand drop significantly.

All this will send a shiver through Scotch whisky makers, as well as other luxury goods companies in the UK and Europe. The most recent evidence comes from Pernod Ricard, owner of the Chivas Regal brand, which has seen sales of its Scotch whisky fall by a double digit rate over the critical Chinese New Year period.

Canadean’s local team are also reporting a slowdown in the sales value of red wine, as China’s wine drinkers switch to mid-range brands and the extraordinary growth in demand for top level labels such as Lafite, is finally checked.

Is this a short term blip or a sign of things to come? This partly depends on the strength of will of Mr Xi, and how long his commitment to the anti-corruption campaign lasts. For now, the luxury goods makers who have enjoyed this source of almost unfettered demand, will need to look to the rising income of the average Chinese consumer to drive growth – thus aligning with the government’s aim of middle class enrichment as the next phase of China’s economic growth.

All this will send a shiver through Scotch whisky makers Photograph: Getty Images.

Emily Neil is the CEO of Canadean

Getty
Show Hide image

Italian PM Matteo Renzi resigns after referendum No vote

Europe's right-wing populists cheered the result. 

Italy's centrist Prime Minister Matteo Renzi was forced to resign late on Sunday after he lost a referendum on constitutional change.

With most ballots counted, 60 per cent of Italians voted No to change, according to the BBC. The turn out was nearly 70 per cent. 

Voters were asked whether they backed a reform to Italy's complex political system, but right-wing populists have interpreted the referendum as a wider poll on the direction of the country.

Before the result, former Ukip leader Nigel Farage tweeted: "Hope the exit polls in Italy are right. This vote looks to me to be more about the Euro than constitutional change."

The leader of France's far-right Front National, Marine Le Pen, tweeted "bravo" to her Eurosceptic "friend" Matteo Salvini, a politician who campaigned for the No vote. She described the referendum result as a "thirst for liberty". 

In his resignation speech, Renzi told reporters he took responsibility for the outcome and added "good luck to us all". 

Since gaining office in 2014, Renzi has been a reformist politician. He introduced same-sex civil unions, made employment laws more flexible and abolished small taxes, and was known by some as "Europe's last Blairite".

However, his proposed constitutional reforms divided opinion even among liberals, because of the way they removed certain checks and balances and handed increased power to the government.

 

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.