December 23, 2024

Economix: Beer Drinking and China’s Economy

The average Chinese adult drank about a third of a bottle of beer in 1961, less than the average resident of Iran. By 1991, consumption topped a bottle a year, but still lagged behind 117 other nations, according to the World Health Organization.

By 2007, the Chinese were drinking almost a six pack a year. While that’s still considerably less per capita than in beer gardens like the Czech Republic (where the average adult drinks about 24 beers a year) it’s enough to make China by far the world’s largest market for beer.

That story can be repeated for any number of consumer goods, of course. But what’s interesting about beer is that the trend is not likely to last. A paper by two economists at the University of Leuven, in beer-loving Belgium, finds that people drink more beer as their incomes rise, until they make about $22,000 a year.

Then they start drinking less beer.

The paper, brought to my attention by the Reuters blogger Felix Salmon, doesn’t offer much in the way of explanations, but perhaps the most obvious one is something many Americans personally experience in their 20s. As you start making more money, and assuming more responsibility, there is less opportunity to drink -– and the potential consequences become more costly.

People also start drinking more wine.

The paper notes that patterns of alcohol consumption are converging, diminishing the long-standing, much-caricatured division of Europe into a wine-drinking south and a beer-drinking north. (The history of these divisions is well-told in the delightful book “A History of the World In Six Glasses.”)

“Increased openness to trade and globalization has contributed to a convergence in alcohol consumption patterns across countries,” write the authors, Liesbeth Colen and Johan Swinnen. Wine drinking increased in places like Germany and Belgium, while beer drinking spiked in Greece and Spain. (France, however, is sitting out the trend.)

This suggests, notes Mr. Salmon, that the Chinese inevitably will start drinking more wine. Much the same thing appears to be happening in Brazil, Russia and other emerging markets. But not in India, where the major religions frown on drinking alcohol, and neither beer nor wine is heavily consumed.

Article source: http://feeds.nytimes.com/click.phdo?i=bf640c3d5f614bcfa46eb16dfefd501c

G.E. Tops Forecasts and Raises Dividend

Net income was $3.4 billion in the first three months of 2011, or 31 cents a share, compared with $1.9 billion and 17 cents in the quarter a year ago.

Excluding one-time items, earnings were 33 cents a share, topping the average estimate of 28 cents from analysts surveyed by Thomson Reuters. Earnings from continuing operations were $3.5 billion compared with $2.4 billion in the quarter a year ago.

With the results, G.E. joins other companies in the manufacturing sector that have topped forecasts this quarter, including United Technologies, Eaton and Honeywell.

The chief executive of G.E., Jeffrey R. Immelt, said in a statement that the company had emerged from the recession a stronger company.

“GE Healthcare, Transportation and Aviation delivered strong results,” Mr. Immelt said. “Strategic investments in high-growth segments have strengthened the company’s energy portfolio and position that business to return to growth in the second half of this year. We ended the quarter with a record high backlog of $177 billion.”

GE Capital also had a strong first quarter, earning $1.8 billion after tax,” he said.

Over all, revenue rose 6 percent, to $38.45 billion in the first quarter, exceeding analysts forecasts of $34.64 billion. Revenue in the same quarter a year ago was $36.2 billion.

The company also raised its quarterly dividend by a penny, to 15 cents, beginning in the third quarter, the report said. It had increased its dividend twice in 2010. In July, it rose to 12 cents a share from 10 cents, and in December it rose further, to 14 cents. The company paid 31 cents a share until February 2009, when, for the first time since the Great Depression, the board cut its dividend to conserve cash.

G.E. also completed the sale of 51 percent of NBC Universal to the Comcast cable network in the quarter, which resulted in an after-tax gain of 4 cents a share. In the deal, Comcast paid General Electric just under $6.2 billion in cash and contributed its pay TV channels like E Entertainment Television and the Golf Channel, worth $7.25 billion, to NBC Universal.

While G.E. is a household name as a manufacturer of everyday products like lights bulbs and electric fans, but it also has a diverse portfolio of finance and business units.

Its lending division, GE Capital, is the nation’s largest nonbank financial institution, and it has provided more than half of the company’s profit in some recent years. But the unit was struggling amid the fallout from the collapse of the real estate market, and Mr. Immelt has tried refocus G.E. more toward the industrial sector.

The company said GE Capital reported net income of $1.8 billion in the first quarter of 2011, up from $583 million in the quarter a year ago.

“With losses having peaked, we are originating new business at attractive margins and our funding costs continue to be favorable,” Mr. Immelt said of GE Capital.

General Electric said when announcing its last results in January that it had a backlog of orders that positioned it for growth in 2011, with the transportation, health care and finance units expected to lead in earnings. On Thursday, Mr. Immelt said the company’s backlog, a gauge of future results, was $177 billion.

The company has continued to diversify and make acquisitions, while trying to build its businesses in crucial sectors like energy. Early this month G.E. announced plans to build the nation’s largest photovoltaic panel factory, with the goal of becoming a major player in the market.

Article source: http://www.nytimes.com/2011/04/22/business/22electric.html?partner=rss&emc=rss

U.S. Retailers Report a Surprising Rise in March Sales

Analysts predicted the first drop in sales since August 2009 at stores open at least a year, a crucial measure known as same-store sales.

But the 25 retailers tracked by Thomson Reuters posted on Thursday an unexpected 1.7 percent increase in March, handily beating the average analyst estimate of a 0.7 percent decline. That was on top of a 9 percent increase in March 2010.

“The thing about retail is everyone talks about weather and holiday shifts, and that’s usually deep enough analysis for most,” said Joel Bines, managing director at the consulting firm AlixPartners. “But we’re seeing a real firmness in the marketplace for retailers that used the last couple of years to get their house in order.”

More than four-fifths of the retailers tracked beat analysts’ estimates. The widest margin was at the Limited, where same-store sales rose 14 percent; analysts had forecast a 1.5 percent increase. Saks Fifth Avenue also shot by forecasts, with same-store sales rising 11.1 percent, instead of the estimated 0.8 percent.

And the wholesale club Costco posted a jump of 13 percent jump, well above estimates of 5.7 percent.

Still, several stores posted drops in same-store sales. Gap Inc., which includes the Gap, Banana Republic and Old Navy divisions, was down 10 percent. Kohl’s was down 6.5 percent, and Target down 5.5 percent.

Gap said Thursday that the tsunami in Japan, where it has 150 stores, would bring down its first-quarter earnings by 4 cents a share, putting it below the current estimate of 44 cents.

 

About a year ago, there was a big difference between how various sectors were performing. In March 2010, for instance, there was a gap of almost 11 percentage points between the best-performing segment (department stores, up 12.3 percent) and the worst-performing one (drug stores, up 1.6 percent).

This March, though, the sector with the best performance (discount stores, up 3.9 percent) was less than 5 percentage points away from the sector with the worst (apparel, down 0.9 percent).

 

“First you saw the differentiation in the segments,” Mr. Bines said. “Now, it’s performance-based retail again,” where there are big differences between competitors in the same category.

The companies with the biggest jumps cited a number of reasons for them.

Saks said strong categories included the women’s designer and contemporary apparel categories, men’s clothes, and accessories including handbags, jewelry and men’s and women’s shoes.

The Limited, which owns Victoria’s Secret, said that division posted a 19 percent increase in same-store sales, based on the introduction of two new bras and the continuing strength of the Pink collegiate-clothes subcategory.

Costco said that food was a strong performer, while electronics were down slightly, despite good sales of new technologies like 3-D televisions.

Separately, MasterCard Advisors SpendingPulse, which estimates spending across all categories, reported on Wednesday that March sales were reasonably good.

“I’d still consider this relatively solid results, although several of the sectors are showing some deceleration in growth,” said Michael McNamara, vice president of research and analysis for SpendingPulse.

The luxury category was up 8.5 percent in March compared with the same month a year ago, MasterCard Advisors said. Apparel sales were up 4.4 percent, with children’s apparel performing the strongest. Footwear was the only apparel category to decline, by 1.6 percent, which Mr. McNamara said could legitimately be blamed on the weather.

“You don’t want to be wearing spring shoes when it’s still snowing in the Northeast,” he said.

Several retailers said they expected good April results in part because Easter is late in the month. The holiday was on April 4 last year, which pushed some of the spending into March.

Article source: http://feeds.nytimes.com/click.phdo?i=b69b80a5672300dbb7836de7bdfd0fe5