Danone Says Coronavirus Weighs on Bottled Water Sales

(Bloomberg) --

The economic damage from the coronavirus rose by more than $500 million after Diageo Plc and Danone warned the disease outbreak will reduce sales of beverages in China.

Diageo, the maker of Johnnie Walker whisky, said the coronavirus will reduce its sales by as much as 325 million pounds ($422 million) this year after bars and restaurants were shut in many parts of China. Danone, which sells Evian water, said Wednesday that first-quarter sales growth will grind to a halt.

Hermes International Chief Executive Officer Axel Dumas said it’s too early to predict when the Chinese market will recover as the spread of the coronavirus hammers luxury spending there. The French company closed 11 stores in China earlier and has since reopened seven of those, he said on a call with journalists.

Dozens of companies have warned of the mounting economic disruption of the virus, which has infected more than 80,000 people and killed 2,700. The recent spread of the disease in Europe and Asia has led to a 7.3% slump in the S&P 500 Index in the past three trading days.

Diageo fell as much as 2.3% in London, while Hermes dropped as much as 1.4% in Paris. Danone fell 0.9%.

As the virus spreads beyond China, sales in places like South Korea and Japan are also being affected, Diageo said. The company said it’s hard to estimate the duration of the downturn, though it expects consumption to gradually improve and return to normal levels around the end of its fiscal year, which runs through June.

Danone lowered its sales target for this year to growth of 2% to 4% on a like-for-like basis and also cut its profitability goal. The coronavirus will slice about 100 million euros ($109 million) from first-quarter revenue, the Actimel maker forecast.

Hermes also said it sees potential for things to get better, though it’s hard to say when.

“It’s too soon to say things are going back to normal,” CEO Dumas said. “We are in a process of reopening.”

To contact the reporters on this story: Corinne Gretler in Zurich at cgretler1@bloomberg.net;Robert Williams in Paris at rwilliams323@bloomberg.net

To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, Thomas Mulier

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