French Spirits Industry Sees Inflation Giving 2022 Bitter Taste

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The French spirits industry faces a tough year due to geopolitical constraints, soaring inflation, and COVID-19 restrictions in China. After-sales staged a partial recovery in 2021, industry group Federation Francaise Des Spiritueux (FFS) said on Tuesday. “The year 2022 is far more complex,” FFS Chairman Jean-Pierre Cointreau told reporters. “We recovered from the COVID-19 crisis but we can see that sales are at down 4% in the 12 months to the end of May in supermarkets, and down 7% between January and May.”

Spirits exports, France’s second-largest sector after aerospace, had also recorded a fall in the past few months, he said. Last year, they accounted for nearly half of total spirits sales by value and were up 30% at 4.9 billion euros ($5.18 billion).

Geopolitics will be one of the most important parameters in the coming year, referring to the Ukraine war and tensions between China and Taiwan. The United States accounts for 44% of total French spirits shipments in value and Asia 29%. In France, where alcohol consumption has been in decline, sales volumes in retail shops have stagnated in 2021. Therefore, despite higher sales for white spirits like vodka and gin.

Sales rose in hotels and restaurants in France, shut because of COVID-19 but they were still well below pre-pandemic levels. Cointreau also stressed that lower availabilities and higher prices for gas, glass, and grains, used for spirits like vodka, were raising costs and concerns in the industry.

”It could also suffer from grain supply shortages due to the Ukraine war and weather problems. Which are expected to hit this year’s grain production” he said. The FFS, which represents French producers and distributors of spirits beverages, encompasses 250 companies, including small businesses and international groups.

-Reuters.

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