THE BRAND CRISIS
Coronavirus, or COVID-19, is taking a swing at major spirits players, with grim financial outlooks expected for the first half of the year.
In recent news, many people believe that the coronavirus has something to do with Corona beer. Corona beer manufacturer, Anheuser-Busch, is facing a stock market disaster since the end of last year — their shares dropped like crazy and the coronavirus confusion might make it worse.
Let me remind you: Neither Corona beer nor Anheuser-Busch has anything to do with the coronavirus at all. But rumors spread faster than the virus. People with access to the internet started searching for the Corona beer virus on Google.
Other nonsensical search terms included “beer virus” and “beer coronavirus.”
Data shows that Denmark and Cambodia were the top two regions for this unusual search.
Luckily, the trend is declining now. However, the damage is done. A screenshot from Google Trends shows a spike in “corona beer virus” searches around late January 2020 and early February.
Education about the virus could have saved Corona beer from getting bad publicity.
And it should have been the responsibility of the decision-makers and marketing executives of the Corona beer brand — not the government. A simple Facebook or Instagram ad might have been enough to bring the disrepute under control.
When it comes to marketing, some factors are just out of any business’s control. The name “corona” turned out to be a disaster for the beer brand’s manufacturers and distributors.
China is one of the world’s largest luxury alcohol markets—accounting for 20% of Remy-Cointreau profits, 10% of Pernod Ricard and 3% of Diageo. The country is the largest beer market in the world, with the United States and Brazil taking up second and third place.
Brewer Anheuser-Busch InBev has warned over the steepest decline in quarterly profit for at least a decade after coronavirus cost it around £132 million in lost profit.
There’s no doubt that Corona beer has had a rough patch, but some other industries seem to have hit the jackpot because of this whole situation.
THE FACE-MASK MARKET
The frenzy for face masks has meant big business for companies that make those products. Take Alpha Pro-Tech, a Canadian company “in the business of protecting people, products, and environments,” according to its website. It also sells face masks in China.
Between Dec. 27 and Jan. 24, the price of its stock increased from US$3.51 to $6.00.
Between Dec. 30 and Jan. 24, 3M, the most popular face mask brand in China, added $1.4 billion in market value. Honeywell, the American conglomerate that also sells face masks in China, added $500 million in market value in the same timeframe.
THE INDIAN MARKET
With the Chinese economy getting impacted due to the coronavirus outbreak, India can push its exports in the global markets to fill up the space vacated by the neighboring country. Indian exporters of electronics, pharmaceuticals, specialty chemicals, and automobile segments depend on China for raw material and are facing supply constraints, but there are several areas where there are increased opportunities for domestic traders.
Barring a few segments, a large number of engineering exports from India can fill up the market vacated by China; so is the case with products like leather and leather goods.
18 percent of BSE500 stocks have taken a contrarian stand and delivered positive returns to investors between February 12 and 27. The India Cements has rallied the most at 35 percent, after Gopikishan Damani, the brother of market veteran Radhakishan Damani, bought a 2.75 percent stake in it, triggering a frenzy on the counter.
It was followed by Dewan Housing Finance (up 27 percent), BASF (up 25 percent), Suzlon Energy (up 24.67 percent), Mishra Dhatu Nigam (up 16 percent) and Navin Fluorine (up 16 percent).
Max Financial Services, NLC India, Tube Investments, The Jammu & Kashmir Bank, GHCL and Garware Technical Fibres gained between 8-16 percent on similar stock-specific triggers.
Analysts say domestic market-focus businesses are the stocks to stay with.
Global risk aversion sparked off by coronavirus has wiped out major wealth for top Indian billionaires.
Among the large Indian business conglomerates, Reliance Group has been the most affected in terms of loss of market capitalization of their listed stocks. The market cap of all RIL firms has come down by Rs 53,706.40 crore between February 13 and February 27. In Friday’s market crash, as Sensex plunged 1,100 points, RIL shares fell 2.8 percent.