Central European Distribution Corp. (CEDC)

Headquartered in Mount Laurel, New Jersey, the Central European produces, imports, and sells alcoholic beverages in Poland, Hungary, and the Russian Federation. Notable vodka products include Absolwent, Zubrówka, Talka, and several other brand names. The company also serves as importer of products such as E&J Gallo wines, Sutter Home, Corona, Budweiser, Jose Cuervo, Jim Beam, Jagermeister, and others. Two products made by Campari that are distributed by the firm are Cinzano and Campari. Central European has about 4,500 employees, but incurred a net loss of $1.3 billion for 2011. As of early 2013, the stock price fell from more than $75 per share in 2008 to $1.70, making the company ripe perhaps to be acquired.

External Issues

Over the past several years, there has been a modest increase in the consumption of alcoholic-based drinks around the world, and firms in the industry have mostly done well. For example, in 2011, all European alcoholic companies outperformed most broad-based indexes and the DJ Stoxx 600 Index’s Food and Beverage benchmark outperformed the DJ Stoxx 600 index by more than 16 percent. Much of this can be explained by a poor economy and food and beverage stocks, including alcoholic stocks, being viewed by investors as safer havens than broad-based investments.

Factors that could possibly contribute to reducing overall sales in the industry include (a) a substantial decline in economic or geopolitical conditions, (b) increasing health concerns and consequences as new data becomes available regarding alcohol consumption and various health problems, (c) stricter laws in respect to drinking and driving, (d) smoking bans at restaurants around the world may reduce drinking, (e) consumers preferring lower-calorie beverages such as water, or diet soft drinks, and (f) increased regulatory pressures from governments and anti-alcohol groups. Governmental groups could start impose additional excise taxes and import duties and limit the manner in which products can be advertised, such as the tobacco business experienced.