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Rémy Cointreau’s U.S. Momentum Offset By China Struggles, As Sales Fall 11%

June 5, 2014

Rémy Cointreau’s net sales declined by 11% on an organic basis to €1 billion ($1.4b) in its fiscal year ending in March, as the company’s core Rémy Martin Cognac business continued to wage an uphill battle in the Chinese market. Group operating profit slid 41% to €150 million ($203m).

Rémy said the drop in sales was due to its “decision to reduce inventory levels in Chinese distribution networks, against a backdrop of weaker consumption,” adding that its brands maintained “strong momentum” in the U.S. and are posting sales growth in Europe. The profit decline was attributed not only to destocking in China, but also Rémy’s ongoing investments in marketing and its distribution.

Rémy Martin’s sales decreased 21% to €551 million ($746m) for the year, hampered by China, where a government austerity drive continues to stunt growth across the spirits market. Those struggles were partially offset by continued progress in the U.S., Japan, Russia and Africa. Meanwhile, double-digit growth for Metaxa and Mount Gay contributed to a 3.3% sales increase to €237 million ($321m) at Rémy’s Liqueurs & Spirits division.

Rémy’s partner brand business saw a 6% rise to €243 million ($329m), with growth buttressed by its Champagne portfolio in the U.S. (including Piper-Heidsieck). Of the partner brand division’s total, however, €103 million ($139m) in sales was attributable to Edrington Group Scotch whiskies (including Macallan and Highland Park) in the U.S. market. Looking ahead, Rémy will focus its Scotch efforts on its own Bruichladdich single malt brand, as Edrington transferred its Scotch labels—along with Brugal rum—to its newly opened U.S. unit, Edrington Americas, on May 1.

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