The luxury retail sector has been hit hard by the gift controls, and now analysts are worried that luxury cognac producers could take a hit from the prostitution clampdown.
“There are high-end outlets and they tend to offer high-end liquor and people going are in the mood to treat themselves,” Trevor Stirling, European beverage analyst at Sanford Bernstein, who released research on this topic on Monday, told CNBC in a phone interview.
While the effect could be short-term — venues may find a way to reopen — the damage done to consumer confidence in visiting the venues that may be suspected of illicit activities is likely to linger, Stirling added.
“People are going to be cautious about going to these bars because they don’t want to be caught in a police raid.”
This could prove the nail in the coffin for a liquor market that’s still reeling from previous crackdowns alla the anti-extravagance campaign.