Suntory is the latest drinks company to issue a coronavirus related profit warning.
The chief executive of Suntory, Takeshi Niinami, said the coronavirus outbreak is hitting alcohol consumption.
It’s normally the busiest time of year in Japan as it’s cherry blossom season, but, but nightlife and restaurant activity have come to a near standstill.
“When I look around hotels, a lot of space is available. At restaurants, very few tables are occupied, and at bars, there’s almost nobody,” he told the Financial Times. “This will impact our bottom line sooner or later.”
He also anticipated changes to production and the supply chain.
“The trend to shift production lines will be enhanced globally,” he added. “China will still be the centre, but production will go back to mother countries to some extent.”
Japan’s whisky market is also suffering, as local distilleries made the decision to temporarily cease tours from February 15.
Tours have been halted at Suntory’s Yamazaki and Hakushu distilleries, Nikka’s Yoichi and Miyagikyo distilleries, at the Fuji-Gotemba distillery owned by Kirin and several of the smaller whisky making sites like the Shizuoka distillery. All tour cancellations will be in place by mid-March with no current plan to restart.
SMBC Nikko Securities estimates that annual beer sales in Japan will fall 4% from a year earlier.
It’s also been forecast that the number of foreign visitors will decline 40% quarter-on-quarter in the first three months of the year.
Kyoto recently launched the ‘empty tourism’ campaign to attract more visitors. The posters created for the campaign showcase how travellers could have the district’s most-visited spots all to themselves.
Economists expect the Japanese economy to shrink at an annualised rate of more than 2% in the first quarter as a result of the crisis.
“There will be considerable economic damage,” Yoshinori Isozaki, Kirin’s chief executive said at a recent earnings presentation, adding that the impact on beer consumption in the on premise would be “immeasurable”.
Suntory offers support to China
Niinami and Kong Xuanyou, Chinese ambassador to Japan, held a meeting on February 25 that saw Suntory donate 50 million Japanese yen (US$472,500) to the Chinese government to support its response to the coronavirus outbreak in China.
Niinami also offered Suntory’s sincerest support and sympathies for those affected in China.
Suntory noted it has a long-standing partnership with China and is highly committed to supporting the Chinese government and the Chinese people in confronting COVID-19 epidemic.
