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Pernod Ricard subsidiary slams Czech spirits ban

By Ben Bouckley , 20-Sep-2012

Pernod Ricard’s Czech subsidiary Jan Becher (JBKB) says the Czech government’s decision to ban all strong spirit sales in the country, following 20+ methanol-related deaths linked to local bootleg liquor, is disproportionate and will hit sales of its safe products.

The European Spirits Organization (CEPS) has also urged the European Commission to act in helping lift the ban, warning that it hurt its members’ safe spirit sales, and was likely to increase, not reduce, bootleg demand.

JBKB produces local Czech brands, but also distributes Pernod Ricard brands there such as Havana Club (pictured), Malibu, Martell and Chivas Regal. None are linked to the deaths but all have been stripped from sale.

JBKB said in a Monday statement sent to BeverageDaily.com that its management was concerned that banning all drinks containing 20%+ ABV would hit, “not only the company’s financial situation linked with the local market, but increasingly also…export activities”.

“Poland banned the import of Czech-produced spirits, but we are also receiving growing concerns…from other markets such as Germany, Austria and others,” the company said.

Legality of ban questioned

JBKB also warned that the situation – the ban has been in place since 7pm last Friday evening – would seriously damage Czech export performance, not solely in spirits but also domestically, in the Czech foodservice sector.

Domestically, at least, sales of spirits in the Czech Republic totaled 89.8m liters in 2011, and were worth €2.036bn ($2.633bn), according to the latest Euromonitor International data, which before the ban arose predicted 2012 volume sales of 90.3m liters.

Anthony Schofield, JBKB general manager, said on Monday: “We are, together with our colleagues in Pernod Ricard group, assessing the conformity of this decision about the blanket ban, as it penalizes international brands in terms of the European free movement of goods.”On September 15, JBKB said it disagreed with the ban that it understood that the Czech government’s need to take “strong actions” in a critical situation, but patience has since worn thin.

Similar recent incidents in other EU states and outside the union had never led to total bans, JBKB said, with energy traditionally focused on tracking down illegal producers and distribution channels, and recalling affected products.

It should also release the distribution and sales of safe products – Czech News Agency CTK suggests up to 20m bottles – controlled and checked by government inspectors, JBKB added.

Diageo ceases Czech trading

Meanwhile, a spokeswoman for rival Diageo told BeverageDaily.com last night: “In line with the ban, Diageo has – along with all other spirits companies – stopped trading in the Czech Republic until further notice.”

She added: “There were no imported, and therefore no Diageo brands implicated, and we are hopeful that once all necessary measures have been taken, our business in the Czech Republic will return to its normal cycle.”

Paul Skehan, CEPS director general, wrote to the Commission on Tuesday, stating press reports indicated that only very cheap local rum and vodka ‘brands’ and unbranded six-liter containers had been responsible for putting adulterated products on the market.

Legitimately produced, packaged, stamped and distributed brands provided consumers with a quality assurance, he wrote, and their absence from the market could encourage demand for bootleg products.

Urging the Czech government to lift the ban, Skehan also noted that it was costing the nation around 25m koruna/day (US $1.3m) in lost excise duty.

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