European alcohol distributors competing for fewer customers amid recent studies suggesting that drinking on the downturn in the region, new report says
Nevin Barich
NEW YORK
,
November 2, 2011
(press release)
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Recent studies suggest that drinking is on the downturn in Europe. The downturn in consumption has led to fierce competition between European alcohol distributors, who are now competing for fewer customers. The Bedford Report examines the outlook for companies in the Beverages -- Wineries and Distillers industry and provides equity research on Central European Distribution Corporation (NASDAQ: CEDC - News) and Constellation Brands, Inc. (NYSE: STZ - News). Access to the full company reports can be found at:
www.bedfordreport.com/CEDC
www.bedfordreport.com/STZ
An in depth report courtesy of The Economist finds that in France and Italy the average adult drinks over a third less than he or she did 30 years ago, while Germans and Spaniards are also drinking less, and alcohol consumption has likewise fallen in most of eastern Europe in recent decades.
In Russia, President Dmitry Medvedev has said he believes that encouraging people to switch from Vodka to wine may assist the country's toughest anti-alcohol campaign since the 1991 fall of the Soviet Union. "Countries where this sector is strong have no problems with alcohol abuse: problems with alcohol abuse stem from other drinks," he added.
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Some Distillers like Central European Distribution Corp., the largest producer of vodka in the world, have had a difficult time recently dealing with big changes in Russia's alcohol regulation policy. The country is attempting to cut down on alcoholism and new regulations including advertising restrictions and required renewal of alcohol licenses for large volume sellers have significantly affected companies like CEDC that do a lot of business in Russia. William Carey, President and CEO, says the company has successfully finished all of its re-licensing as a producer/wholesaler, but continue to see problems within its client base of wholesalers, who continue to struggle through this licensing process, which is affecting its route to market.
Companies in the industry like Constellation Brands Inc. have been experiencing increased demand in North America of late. Constellation Brands Inc. has been able to produce solid numbers through cutting costs by restructuring and bringing more of its bottling to the United States to defend against currency volatility and rising glass prices.
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