Global alcohol producers are "drowning"

ArmInfo. An unprecedented decline in demand for whiskey, cognac, and tequila has led to the accumulation of large stockpiles of unsold alcohol at leading global producers, according to the Financial Times.

This is forcing them to mothball production facilities and reduce product prices to reduce warehouse inventories.

The combined unsold product inventories at the five leading global spirits producers—Diageo, Pernod Ricard, Campari, Brown-Forman, and Remy Cointreau—are approximately $22 billion, the highest in more than a decade, according to FT calculations based on the companies' financial statements.

For French cognac producer Remy Cointreau, the stockpiles amount to €1.8 billion, almost double its annual revenue and close to the company's market capitalization.

The accumulation of unsold product inventories at spirits producers increases their debt burden and threatens to lead to a price war, the newspaper notes.

"The rise in inventories is unprecedented," notes Bernstein analyst Trevor Stirling. He notes that unsold alcohol inventories at companies that disclose this information currently exceed levels seen during the financial crisis.

Investors debate the extent to which the decline can be attributed to deeper societal changes. Some believe the decline in alcohol consumption is primarily due to the rapid adoption of weight-loss drugs like Wegovy and Ozempic, as well as increased health awareness in general.