Analysis: Killer Czech liquor takes toll on profits

widest ban in 20 years is costing the hospitality and retail industry millions of euros in lost revenue every day.

Producers including Parisbased Pernod complain that the ban is unjustly punishing legal businesses while encouraging a further spread of illegal alcohol on the black market.

Pernod, which sells highend global brands like Chivas Regal whisky, Absolut vodka and Martell cognac, questioned the legality of the ban and asked the EU to assist the government in lifting it, said Anthony Schofield, the head of the French company’s Czech unit.

“The government has hugely overreacted,” Schofield said. “To me, they are destroying Czech brands and the Czech reputation abroad. It is very debatable whether such a complete ban is even legal.”

Liquor shelves in bars and supermarkets including Tesco and Ahold’s Albert outlets have been bare since Friday because of the prohibition. More than 20 million bottles have been taken out of distribution as police search for the source.

“Declining profits, in the context of 19 and potentially more deaths, are a lower priority at this moment,” Health Minister Leos Heger said yesterday. Easing the ban “won’t be a matter for consideration in the next few days”.

Twenty-three people had died from poisoning in the country so far and the causes of one or two other deaths were awaiting autopsy confirmation, police spokeswoman Stepanka Zatloukalova said yesterday.

Pernod Ricard also suffered “significant financial effect”, spokeswoman Petra Noskova said, while Schofield added that the ban could “hugely damage” exports of Becherovka, the best-known Czech liqueur.

Ahold, which operates 282 Albert and Hypernova outlets in the Czech Republic, was losing about 1 million koruna (R436 000) a day, spokeswoman Simona Caidlerova said.

Sales of alcohol at dutyfree stores dropped 85 percent over the weekend as customers were prevented from purchasing cognac, whisky and local high-end alcohol, said Jana Volickova, a marketing manager at Lagardere-owned Aelia.

“Our customers show understanding, but they are very disappointed, because local alcohol is the favourite souvenir people like to bring back from the Czech Republic,” Volickova said.

The tainted alcohol was contained in bottles under fake labels from at least two Czech liquor makers and the bottles were not properly sealed, police said.

The poisonous drink was sold at discounts in bottles labelled as vodka or tuzemak, a local rum-like alcoholic beverage. Several people went blind or fell into coma after consuming it. – Bloomberg