As reports The Financial Times reports that reports from the five largest alcohol companies (Diageo, Pernod Ricard, Campari, Brown Forman and Remy Cointreau) showed an inventory accumulation of $22 billion, the highest inventory level in a decade. French cognac producer Remy’s €1.8 billion cognac inventory alone is now almost double its annual revenue.
According to Remy Cointreau CEO Franck Marilli, the surplus of raw spirit will force prices down. The price of Hennessy cognac in the US has also fallen. Thus, if during the pandemic the cost reached up to $45 per bottle, and now it is no higher than $35.
In addition, producers are forced to freeze production. Japan’s Suntory has already closed its main Jim Beam bourbon plant for at least a year. And Diageo has suspended whiskey production at its facilities for six months.
According to the FT the reason for the overstocking is a pandemic. Barrels of spirits began piling up after companies responded to the boom in alcohol consumption during Covid-19 by dramatically increasing production.
As the publication notes, many switched to upscale spirits and homemade cocktails as bars and restaurants closed. That’s why the trend of shifting from wine and beer to higher-end spirits intensified in 2020. Tequila sales alone are up 80%.
