Wednesday 25 April 2018

Diageo beer sales could go flat in Indonesia

Guinness - Diageo hopes to increase sales in Indonesia
Guinness - Diageo hopes to increase sales in Indonesia

Paul O'Donoghue

London-listed drinks giant Diageo asked the Indonesian government to delay a new law to restrict the sale of beer in the Asian country.

Indonesia decided earlier this year to ban the sale of drinks with an alcohol content between 1pc and 5pc in convenience stores and small shops. The ban comes into effect on Thursday.

Indonesia is part of Diageo's South East Asia market, which accounts for between 2pc to 3pc of the company's sales. Although not hugely significant in terms of revenue, the decision is a setback in one of the markets on which global drinks companies are increasingly pinning growth hopes.

The domestic beer market in the country had been growing at a rate of between 5pc and 6pc a year, according to the International Wine and Spirits Record, the London-based drinks research group, and the influence of Islamic groups in helping to push the beer restrictions is seen as a trend to watch.

A spokeswoman for Diageo told the Irish Independent that the company wants to work with the government. "The industry and retailers stand ready to work with government on real pragmatic solutions. "A preferred outcome would be that regulation is delayed for at least another 12 months," the spokeswoman added.

She said that this would give time so that "workable solutions can be reached with multiple parties to achieve the government's objectives such as tackling underage drinking while ensuring the viability of local jobs, tourism and mitigating further risk to illicit alcohol".

Irish Independent

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