Business news in brief
Wine output near 20-year low
World wine output may fall 5.3 per cent this year because of excess rain that spoiled grape harvests in South America and adverse weather in French vineyards, resulting in one of the smallest vintages of the past 20 years, according to experts. Wine volume may fall to 259.5 million hectolitres from 273.9 million hectolitres last year, according to estimates from the International Organisation of Vine and Wine, a Parisbased group known by its French acronym OIV. Estimated output is equivalent to about 35 billion bottles. Production will be close to that of the weakest years of of past two decades, 2012 and 2002, OIV director general Jean-Marie Aurand said at a press conference. Rainfall in Latin America linked to the El Niño weather phenomenon slashed grape harvests there, while output in France will fall significantly below average, according to the OIV, which has 45 member states.
“Output was greatly affected by exceptional weather conditions,” Mr Aurand said. “If there is one product that is vulnerable to weather events, it’s wine.”Chile’s wine production is expected to fall 21 per cent this
year to 10.1 million hectolitres, while volumes in Argentina may slump 35 per cent to 8.8m hectolitres, based on the OIV’s outlook. “It’s probably the El Nino effect which created these problems,” Mr Aurand said. “A bit of frost and a lot of rain that caused losses at harvest.” Italy is forecast to remain the world’s biggest wine producer, with output slipping about 2 per cent to 48.8 million hectolitres.
Bloomberg
Tesco fires opening salvo in toy battle
Tesco has pledged to match or beat toy prices at J Sainsbur ’s Argos stores in a bid to steal a march on its UK rival as the Christmas shopping season begins. Britain’s biggest supermarket said yesterday it would meet or undercut what Argos charges on about 200 toys, as part of a wider price-matching initiative against the catalog retailer on more than 8,000 products. On its shelves, Tesco is displaying its prices side by side with those of Argos, Britain’s largest toy seller, which was acquired by Sainsbury last month and offers everything from computers to garden furniture.
“Tesco have fired a broadside as the start of the Christmas trading period,” Bryan Roberts, an analyst at TCC Global, said. “There’s usually a bit of a set-to between retailers on toys but what makes this more piquant is that Sainsbury’s now owns the country’s leading toy seller.” Tesco’s move echoes its guarantee to instantly refund customers on branded groceries and could herald a similar battle in general merchandise. Sainsbury bought the Argos parent company for £1.4bn to diversify the company amid a brutal food price war that’s eroded profits across the U.K. grocery industry. Sainsbury's said last week that it would open Argos branches or collection points inside almost all of its stores. Among the toys Tesco has cut prices on is the Zoomer chimp, a robotic primate that responds to voice commands, which it sells for £94.99, £5 cheaper than at Argos. A Lego volcanic exploration base has also been trimmed to £49.49, about£5 cheaper than its rival.
Bloomberg
Exxon tells Saudis: you're wrong about oil supply crunch
Exxon Mobil's boss Rex Tillerson told Saudi Arabia's energy minister on Wednesday that fears of a new global oil supply crunch were exaggerated. The comments came as the US oil industry was adapting to the low price shock and was set to resume growth. Mr Tillerson's remarks about the resilience of the US oil industry come as the Saudis have effectively abandoned their strategy to drive higher cost producers out of the market by ramping up cheap supplies from their own fields. More than two years of downturn that saw oil prices halve to around $50 a barrel today after a boom in US shale oil production have led to a sharp decline in investment.
But MrTillerson, who is due to step down next year and who heads the world's largest listed oil and gas company, said that shale oil producers' resilience in cutting costs to make some wells profitable at as low as $40 a barrel means that North America has effectively become a swing producer that will be able to respond rapidly to any global supply shortage. “I don't quite share the same view that others have that we are somehow on the edge of a precipice. I think because we have confirmed viability of very large resource base in North America ... that serves as enormous spare capacity in the system,” Tillerson told the Oil & Money conference.
Reuters
Boots owner sounds warning over pound
The owner of pharmacy and retail chain Boots said the plunging pound and weaker performance in the UK had knocked sales in its international division in the three months to 31 August. US-based Walgreens Boots Alliance posted a 10.9 per cent drop in sales across its international arm, which includes Boots in the
UK, due to a currency hit. It added that with currency effects stripped out, its overseas retail like-for-like sales fell 1 per cent, dragged lower by UK trading. The firm said group-wide net earnings fell 1.1 per cent to £3.4bn but rose 22.6 per cent on an underlying basis to £4.1bn for the year to August 31.
AP
Luxury goods market hit by terror threat
The terror threat in Europe, a strong dollar and uncertainty over the US presidential elections have eroded the confidence of the globe's big-spenders, holding luxury purchases flat in 2016, according to a study released yesterday. Spending on luxury apparel, accessories and other personal items is expected to hold steady at £222bn this year, a study by Bain Consultancy for the Altagamma association of Italian high-end luxury producers. Add in spending on luxury cars, yachts, jets, cruises, hotels, fine art, design and food, and the market tops a stunning €1 trillion. As political events and monetary policy exert greater influence on luxury spending patterns, brands have turned their focus to wooing buyers in their home countries rather than counting on tourist arrivals to buoy sales, said Bain partner Claudia D'Arpizio.
Bloomberg
Sky looks to poach mobile customers
Sky is preparing to take on telecom groups like BT and Vodafone and has an opportunity to win a “substantial” number of mobile-phone customers from its UK rivals, according to the company’s top executive for the region.“There are literally millions of customers for us to go after,” Stephen van Rooyen, chief executive officer of Sky’s UK and Ireland unit, said yesterdat. “We’ve long had our eyes on the size of the prize. The mobile market is huge.” Sky, which operates in five European countries, is expanding out of its home turf in pay-TV to get customers to buy as many as four different products, intensifying a battle with BT and Liberty Global, Virgin Media, which have already moved into mobile. It’s stepping into a UK mobile-phone market of about £15bn, allying with Telefonica’s O2, which will carry the service on its network.
Bloomberg
Roche gains as sales of breast cancer drugs soar
Roche’s third-quarter revenue rose 4.5 per cent as its trio of breast-cancer therapies offset stagnating sales of some of its older drugs. Sales climbed to SFr12.5bn Swiss francs (£10.2bn), the Basel, Switzerland-based company said in a statement yesterday. That compared with the SFr12.6bn-franc average estimate of nine analysts surveyed by Bloomberg. Roche doesn’t report third-quarter earnings. The world’s biggest oncology-treatment maker is counting on new breast-tumour drugs Perjeta and Kadcyla to help it stay in the lead. The next step for Perjeta will depend on whether it’s better in combination with the older blockbuster Herceptin than the earlier drug paired with chemotherapy alone in a study, dubbed Aphinity. Results previously expected by year-end will now probably come in the first quarter, Roche said.
Bloomberg
Intel wins latest round over EU fine
Intel’s fight to overturn a record €1.06bn (£950m) European Union antitrust fine received a boost from an adviser to the bloc’s top court in a case that could have ramifications for a growing list of disputes involving US tech giants from Google to Apple. Intel’s appeal should be totally re-examined by a lower court, which blundered by ruling against the company’s system of rebates for PC makers using its chips, Advocate General Nils Wahl of the EU Court of Justice said in a non-binding opinion Thursday. The top court will decide whether to back his views in a ruling expected within about six months. “If the court follows, this could be the most important ruling of the past 25 years because it’s the complete destruction of the
judgment of the General Court but also of the European Commission’s position,“said Damien Geradin, a lawyer at EDGE Legal in Brussels.
Bloomberg
VW plans €3.7bn cuts to fund new technology
Volkswagen plans to cut €3.7bn (£3.3bn) in costs at its VW car brand by the end of 2020 to shore up profitability and safeguard investment in future vehicle technology, according to people familiar with the matter. German factories will account for the bulk of the savings, with a target of about €3bn. The costcutting is designed to prepare Volkswagen’s biggest unit for a fresh start as of 2021 including turnaround plans for struggling operations in the US and South America, they said. Volkswagen declined to comment. Restoring weak profit at the VW brand is key for Europe’s largest automaker to emerge from the emissions-cheating scandal that erupted a year ago.
Bloomberg