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Struggling Rémy Cointreau Improves In Third Quarter As Rémy Martin Rebounds In China

January 22, 2015

After enduring a sharp dropoff in its fiscal first half, Rémy Cointreau saw flagship Rémy Martin Cognac achieve third quarter shipments growth of 7.4%, with improvement in the key markets of China and the U.S. The Cognac brand’s performance wasn’t enough to propel Rémy Cointreau to sales growth in the third quarter (ended December 31), as total sales fell by 1% in organic terms. Still, Remy Martin’s growth was a welcome sign for the company, which has been plagued by a slowdown in China’s imported spirits market for the past two years.

For the first nine months of Rémy Cointreau’s fiscal year, sales were down 4.1% on an organic basis and 12.4% on a reported basis (the discrepancy was due mostly to the impact of The Edrington Group ending its U.S. distribution contract with Rémy in March 2014). Rémy Martin Cognac’s nine-month sales—which account for around 60% of total company turnover—declined by 9.3%, while the liqueurs & spirits division (roughly 25% of company sales), led by Cointreau liqueur, grew by 5.8%. Sales of Bruichladdich, the single malt Scotch brand Rémy acquired in 2012, doubled from a small base during the nine-month period. Meanwhile, sales of Rémy’s partner brands (mainly Piper-Heidsieck and Charles Heidsieck Champagnes, some of William Grant & Sons Group’s spirits and the Russian Standard vodkas in various markets) increased by 0.8%. The partner brands comprise 15% of company business.

Rémy Cointreau’s organic sales decline for the first three quarters of its 2014-15 fiscal year was slightly larger than analysts were projecting, even as Rémy Martin’s dropoff was less severe than analysts’ estimates. The company said it expects the improved performance to continue in the fourth quarter and that it’s targeting positive organic growth in sales and current operating profit for the full fiscal year, which ends March 31.

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