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China’s Cognac Slowdown Pushes Rémy Cointreau To Double-Digit Sales Decline

January 21, 2014

The slowdown in China’s Cognac market dealt a sharp blow to Rémy Cointreau in the first nine months of the company’s fiscal year. Rémy reported earlier today that a difficult first half (ended September 30, 2013) was followed by an even tougher third quarter (ended December 31, 2013), resulting in a 12.3% sales decline for the first three quarters of its fiscal year to €964.5 billion ($1.3b).

While Rémy reported sales growth in the U.S. and Japan for the nine-month period and said Europe “continued to be resilient,” the Paris-based drinks marketer added that “the unfavorable situation for spirits in the Chinese market did not improve during the third quarter.” The company’s flagship Rémy Martin Cognac brand, which has done around one third of its business in China in recent years, has been buffeted by the country’s crackdown on luxury gift-giving. Rémy Martin’s sales for the nine months were down by 21% to €589.5 million ($796m). Rémy Cointreau’s other units—liqueurs and spirits (+3.2%) and partner brands (-0.5%) both fared better than Rémy Martin, but each of those account for only around 20% of the company’s business, and as such were unable to offset its double-digit sales decline.

Earlier this month, Frédéric Pflanz resigned as Rémy’s CEO, just three months after assuming the post. François Hériard Dubreuil replaced Pflanz in a transitional role.

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