This European company isn’t sugarcoating its coronavirus problem


Pernod Ricard, the maker of Jameson whiskey and Absolut vodka, cut its annual profit growth outlook for 2019-2020 on Thursday, as it said China’s coronavirus epidemic was likely to have a “severe” impact on its third-quarter performance.

The French spirits maker, which generates 10% of its global sales in China, said it couldn’t predict the “duration and extent of the impact,” but stressed it remained confident on overall strategy.

“In our view Pernod Ricard deserves credit for attempting to quantify the impact, which few other companies we follow have done,” said James Edwardes Jones, analyst at RBC Capital Markets.

He added: “We don’t believe that this should weigh heavily on the shares, albeit China is an important market for Pernod Ricard (we estimate 14% of sales and 20% of EBIT [earnings before interest and taxes]) if the lack of reaction for others in the sector is any guide.”

Shares in Pernod

RI, +3.80%

 closed up 3.8% on Thursday.

Pernod’s warning came as the European Union cautioned on Thursday that the coronavirus outbreak had emerged as a “new downside risk” for the eurozone’s growth prospects.

In its winter 2019 economic forecast, the European Commission said: “The longer it lasts, however, the higher the likelihood of knock-on effects on economic sentiment and global financing conditions.”

Paolo Gentiloni, European Commissioner for the Economy, added: “We still face significant policy uncertainty, which casts a shadow over manufacturing. As for the coronavirus, it is too soon to evaluate the extent of its negative economic impact.”

Pernod, the world’s second-biggest spirits group after the U.K.’s Diageo

DGE, -0.87%,

said operating profit from recurring operations would grow between 2% to 4% this year, down from the 5% to 7% it previously predicted, because of the impact of the coronavirus outbreak.

The French spirits maker reported a net profit of €1.03 billion ($1.12 billion), up 1% from a year earlier, while profit from recurring operations was €1.78 billion, up 4.3% on an organic basis. Sales reached €5.47 billion in the six months to Dec. 31, a 5.6% gain on the year earlier, and 2.7% higher on an organic basis.

The company came under pressure to boost its margins and improve its corporate governance in December 2018, after U.S. activist investor Elliot Management built a 2.5% stake in the company.



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Samsung prices cheapest new Galaxy smartphones at $1,000, even after Apple went lower on iPhone


Samsung Electronics Co. Ltd. announced a new lineup of its popular Galaxy smartphones Tuesday, with a base price of $1,000 that is moving in an opposite direction of rival Apple Inc.’s iPhones.

The South Korean electronics giant unveiled three Galaxy S20 phones with 5G connectivity and better cameras, ranging in price from $999 to $1,399, to go on sale in March; and new Galaxy Buds+ earbuds. Samsung

005930, +0.34%

 also showed off its next stab at a foldable smartphone, the Galaxy Z Flip, which is cheaper and has more apps than the Galaxy Fold, which was also announced in San Francisco a year ago.

See also: Samsung has a $1,980 foldable smartphone because innovation is pricey

The Flip, starting at $1,380 and due Feb. 14, resembles a flip phone with a square, bendable glass interior display and will invariably draw comparisons to Motorola Co.’s new $1,500 Razr phone. It is the first product under Samsung’s new head of mobile, TM Roh. Samsung offered hints of it during an ad during the Academy Awards on Sunday. Unfolded, its screen is 6.7 inches diagonally.

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Samsung’s Galaxy Z Flip phones.

Foldable phones are vendors’ latest attempt to jump-start a market where sales have slackened, though with their steep price tags are likely only to appeal to tech enthusiasts and early adopters for the time being. But Samsung also moved prices higher on its standard Galaxy S line of phones, which stands in direct contrast to Apple’s

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 direction in its most recent round of new phones.

Samsung’s previous lineup of Galaxy smartphones cost as little as $649 for a Galaxy S10e when introduced a year ago, with the cheapest standard Galaxy phone, the base S10 model, starting at $799. The cheapest phone in the new lineup, the Galaxy S20, will cost $999, with the Galaxy S20+ starting at $1,199 and the Galaxy S20 Ultra beginning at $1,399. The S10 lineup will be discounted.

Apple originally pushed the envelope by selling the iPhone X for a base price of $1,000 starting in late 2017, but created more of a range of prices in its most recent launch of the iPhone 11. The cheapest iPhone in the latest line from Apple started at $699, $50 lower than the lowest-price option in Apple’s previous launch cycle.

For more: Apple’s iPhone 11 event reveals a dramatic change in strategy

Samsung appears to be headed the other way, giving all of its new Galaxy line of smartphones a $1,000 price tag. Apple set revenue records in the holiday season thanks to the strength of its latest iPhone 11 offerings.

Samsung should be able to take the high road in pricing because the smartphone market is “bifurcating into premium- and low-priced markets as consumers hold on to their phones longer,” Patrick Moorhead, principal analyst at Moor Insights & Strategy, told MarketWatch in an email.

“Samsung has the A Series for lower-priced phones and therefore I’m OK with the prices of their premium products as they deliver different features,” Moorhead said.

Added Bob O’Donnell, president of and chief analyst at TECHnalysis Research: “Samsung prices have been high for a while.”

Samsung focused on the camera in Tuesday’s event, after the iPhone 11 added an extra lens for wider-angle shots, and Google’s

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 Pixel phones offered a lowlight feature.

If anything, Tuesday’s unveiling had the feel of a do-over. Defects in the $1,980 Galaxy Fold’s screen, squishy app compatibility, and delays in availability put a dent in sales. Compounding matters, reviewers panned the phone’s smaller front screen.

After Tuesday’s event, Samsung was expected to talk more about the new Galaxy phones at the annual Mobile World Congress later this month in Barcelona, Spain, but fears of the Covid-19 outbreak could hurt attendance at that event. On Tuesday, AT&T Inc.

T, -0.44%

 and Intel Corp. were among those to drop out of the event, joining Nvidia Corp.

NVDA, +1.87%

 , Facebook Inc.

FB, -2.76%

 , Cisco Systems Inc.

CSCO, +0.53%

 , Ericsson

ERIC, +3.33%

 , LG

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 , Sony Corp.

SNE, +0.21%

 , and Amazon.com Inc.

AMZN, +0.79%

 .

Indeed, as the crowd filed in for the Samsung event, it passed a team taking temperatures in the security line to check for the coronavirus. The company also offered hand sanitizer stations and face masks.



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‘We feel entitled to artificially inseminate a cow and steal her baby.’ Joaquin Phoenix’s Oscar speech will be welcomed by America’s growing army of vegans


Dairy milk got a bad reception at Sunday’s Academy Awards.

Joaquin Phoenix took aim at dairy farming in his Oscars speech for Best Actor in a Leading Role for “Joker.” “We go into the natural world and we plunder it for its resources. We feel entitled to artificially inseminate a cow and steal her baby, even though her cries of anguish are unmistakable,” he said. “Then we take her milk that’s intended for her calf and we put it in our coffee and our cereal.”

“We fear the idea of personal change, because we think we need to sacrifice something, to give something up,” Phoenix added. “But human beings at our best are so creative and inventive, and we can create, develop and implement systems of change that are beneficial to all sentient beings and the environment.”

The Dairy Farmers of America (DFA), a dairy marketing cooperative, said net sales had declined by $1.1 billion in 2018, from $14.7 billion in 2017 to $13.6 billion in 2018. Dairy industry executives say the milk beverage category remains competitive, while the dairy market as a whole has seen growth. The cooperative did not immediately reply to a request for comment on Phoenix’s speech.

‘We fear the idea of personal change, because we think we need to sacrifice something, to give something up.’


—Joaquin Phoenix

Independent data supports those figures. Dairy milk sales fell to approximately $12 billion last year from $15 billion in 2015, while alternative sources of milk have risen over the same period, according to the market researcher Nielsen. Almond milk sales have increased by nearly 6% to $1.35 billion over the same period, while oat milk soared 662% to nearly $60 million in 2019, Nielsen added.

Market research group Sentient Media crunched more than two dozen studies involving 80,000 Americans and concluded that there are approximately 6.5 million self-identifying vegans in the U.S., and that does not include those who want a lighter meat- and dairy-free diet. That likely why Nielsen data commissioned by the Plant Based Food Association estimates that plant-based food sales surpassed $3.3 billion in 2018, more than doubling from the previous year.

“People change their diets for a lot of reasons: to bring an end to animal farming, to fight for a livable climate, to promote health and personal growth, to be kind,” according to the Sentient Media report. “There is no right answer here. The way we choose to eat will likely change a number of times over the course of our lives, and that’s okay. Ethical eating works like a spectrum, one that is trending towards compassion.”

Sales of plant-based varieties have grown 6% over the past year, now making up 13% of the entire milk category, according to separate data released last year from the Good Food Institute and Plant Based Foods Association. Sales of cow’s milk, meanwhile, have declined 3%. In fact, 11% of consumers say they’re trying to consume less dairy, according to the NPD Group.

Why artificially inseminate heifers? This University of Kentucky paper aims to answer that question: “It’s quite simple: to increase the number of genetically superior heifers available for herd replacement and sale,” it said. “However, the bottom line is heifer AI puts the dairy farmer in a position where he or she has plenty of genetically superior heifers available for replacement and sale.”

“It makes the process safer for consumers and controls the spread of disease,” the paper from the university’s College of Agriculture added. “Certainly, there are many other valid reasons for using heifer artificial insemination: higher conception rate, increased semen value, calving ease, controlling transfer of reproductive diseases, safety, controlled breeding, better records, and accurate due dates.”

Farmers aim for higher conception rates, increased semen value and controlling transfer of reproductive diseases.

Phoenix and other critics of dairy farming argue that it treats the animals like they’re machines.

“Dairy farmers should not be satisfied with average sires, and should be encouraged to breed heifers to above average sires,” the University of Kentucky paper added. “With a little selection, dairy farmers should expect daughters of AI sires to out milk their non-AI counterparts by much more than 1,200 pounds per lactation.”

Still, many people feel so strongly about alternative milk varieties — whether for reasons relating to health, the environment or animal rights — that they’re willing to pay big money for non-dairy varieties, particularly oat milk. When the Swedish oat milk brand Oatly sold out of its Barista Edition Oatmilk variety in December, one Amazon

AMZN, +2.63%

 seller posted a 12-pack of the milk cartons for $226 (a 32-ounce carton retails for $4.99).

The plant-based market’s best-selling alternatives — almond milk and soy milk — cost almost double at $4.29 a half-gallon (64-ounces), respectively, compared to $2.17 for regular dairy milk, according to a price check by FreshDirect, the online grocery delivery service that delivers in the New York metropolitan area, and areas in Connecticut, Jersey, Pennsylvania and Washington, D.C. Oat milk is almost 2.5 times the cost of dairy milk ($5.29 a half-gallon).

Last year, the dairy company Dean Foods Co. voluntarily filed for Chapter 11 bankruptcy protection, saying it was working toward an “orderly” sale of the company. “Consumers want to reduce, not eliminate, the amount of animal proteins we consume,” Darren Seifer, a food consumption business analyst at NPD Group, told MarketWatch at the time. “They’re pro-protein, they just don’t want to have more meat or more milk to achieve these goals.”

People are certainly becoming more interested in meat and dairy alternatives. Beyond Meat

BYND, +2.83%,

the plant-based meat company, is up 85% since its initial public offering in May 2019, after soaring nearly 238% in the months after its IPO. More large food companies want a slice out of the vegetarian and vegan market: Meat producer Tyson Foods Inc.

TSN, +1.53%

  also entered the alternative protein market last year, unveiling new products under the Raised & Rooted brand.

Phoenix, meanwhile, called on people during his speech Sunday night to find alternative sources to dairy farming. “We fear the idea of personal change, because we think we need to sacrifice something; to give something up,” he said. “But human beings at our best are so creative and inventive, and we can create, develop and implement systems of change that are beneficial to all sentient beings and the environment.”



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