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Rémy Cointreau Flags Continued Destocking In The U.S.

October 25, 2024

Rémy Cointreau says challenges in the U.S. Cognac market are proving longer-lasting than expected, with the company downgrading guidance today to call for “no recovery before Q4 24-25 at the earliest.” The French drinks group posted sales down 16% to €534 million ($578m) for its fiscal first half ended in September, despite a sequential improvement in the second quarter.

Rémy’s Cognac division, accounting for nearly two-thirds of sales, fell 18% to €342 million ($371m) during the period, weighed down by the U.S. and China markets. “In the Americas, and specifically in the United States, ongoing destocking continued to weigh on sales, in a market impacted by the normalization of consumption and high interest rates, all in a fiercely promotional environment,” the company said.

After depleting just under 800,000 cases in the U.S. last year, according to Impact Databank, the flagship Rémy Martin Cognac brand has declined 18% by volume in control states in the year-to-date through September. Among other key brands, 470,000-case Cointreau is down about 1% in control markets year-to-date, while The Botanist Gin continued to rise, increasing 3% after nearing 90,000 cases marketwide in 2023.

Overall, Rémy’s Liqueurs & Spirits division saw sales dip 12% to €182 million ($197m) in the first half, although the company noted that the decline of U.S. shipments marked “a disconnect with the resilience of depletions, with wholesalers keen to optimize their global inventories.”

Turning to the full-year outlook, Rémy noted a “persistent lack of visibility on the timing of recovery in the United States, combined with worsening market conditions in China,” leading it to predict a double-digit organic revenue decline for its full fiscal year.

In an interview with SND in August, Rémy Cointreau Americas CEO Nicolas Beckers weighed in on the U.S. market situation. “Conditions for the Cognac category overall in the U.S. market reflect continued major destocking in an environment marked by inflation, intense promotions, and strong post-Covid normalization of consumption,” he said.

“However, we see this as an opportunity to affirm our long-term view and position Rémy Martin as the most desirable brand within the category. Our strategic approach in the long run is in the upper range with Rémy Martin 1738, XO, and of course Louis XIII. Having said that, we will need to leverage VSOP volumes to invest in the upper grades and in the value strategy. We’re confident it will allow us a stronger long-term position, given that the current headwinds on premiumization are cyclical and driven by lower purchasing power. We’ve also launched Rémy Martin XO Night, which lives at the epicenter of night-time celebrations.”—Daniel Marsteller

Brand	Type/Origin	2023 U.S. Volume¹	Control States’ Volume Growth 2024 YTD²
Rémy Cointreau—Leading Brands in the U.S. (thousands of 9-liter cases)
Rémy Martin	Cognac	789	-18.2%
Cointreau	Liqueur	468	-1.4%
Mount Gay	Imported Rum	125	-6.7%
St. Rémy	Brandy	90	-9.8%
The Botanist	Gin	89	3.4%
Metaxa	Brandy/Liqueur/Ouzo	24	-19.9%
Bruichladdich	Single Malt Scotch	9	-7.3%
Westland	American Whiskey	4	1.3%
Total Leading Brands		1,598	-10.7%
1 Thousands of 9-liter case depletions. 2 Year-to-date through September Source: NABCA & IMPACT DATABANK © 2024