Diageo and Carlsberg hit as Russians suffer from oil price collapse and rouble crisis

Russians aren’t drinking as much as they used to as tumbling oil prices tip the country’s economy into recession, hitting brewer Carlsberg and Johnnie Walker to Guinness drinks giant Diageo.

The drinks industry was once dazzled by Russia as a high-growth market, but now Carlsberg plans to close two of its 10 breweries in the sanctions-hit nation as drinkers are feeling the affects of a downturn and a rouble which is plunging with the tumbling price of oil.

The closure of the breweries, which produce Baltika beer, will cut 15% of the Danish-based group’s capacity in Russia.

Diageo is meanwhile shifting less scotch in Russia with sales down by 17% in a market where consumer confidence has been “significantly impacted” by sanctions and the falling rouble.

“We have been focusing on lower price points in scotch,” finance director Deirdre Mahlan said.

The news was little better elsewhere for Diageo as it was forced into deeper price cuts in the United States — its biggest market — where vodka is slipping out of fashion.

The Chinese scotch market was also cheap.

First-half operating profits were down by 18% to £1.67 billion on lower-than-expected sales of £5.9 billion.

Currency movements will cost the group around £85 million in lost profits this year.