Optimistic boss lifts spirits as Rémy Cointreau sales drain away

The maker of Rémy Martin cognac braced investors for a bigger-than-expected drop in sales this year.
Rémy Cointreau told shareholders that it expects the group’s total sales to decline by between 15 per cent and 18 per cent in this financial year amid a slowdown in the US and China, which drive the majority of cognac sales, accounting for about 70 per cent of the group’s total revenues.
The forecast decline, larger than the 10.6 per cent estimated by analysts, will follow a 19.2 per cent decrease in sales last year.
The group’s disappointing outlook followed a 16.2 per cent drop in sales to €533.7 million for the first six months. Operating profit fell 17.6 per cent to €147.3 million.
A €50 million cost savings programme, which the company said had helped to offset the marked decline in sales during the first half, will continue. Rémy Cointreau added that it would start to resume targeted investments in marketing in the second half to support peak activity in both the US and China.
Eric Vallat, the group’s chief executive, said that while the recovery in the US “is expected to be very slow” there were “recent encouraging signs for cognac”. His optimism helped to lift the shares, which have almost halved in value since the start of the year, €2.65, or 4.6 per cent, to €60 in Paris on Thursday afternoon.
Vallat said that despite the uncertain environment in China, the company had continued to gain market share “thanks to the desirability of our brands, our ability to innovate and our strong presence in key commerce”.
Beijing has imposed steep tit-for-tat tariffs on brandy from the European Union after the bloc voted for tariffs on Chinese-made electric vehicles. The French spirits group has previously said that it would raise cognac prices in China to help to mitigate the impact of the tariffs.
Rémy Cointreau, which also makes Cointreau, the orange-flavoured liqueur, said there was a “persistent lack of visibility on the timing of recovery in the United States”.
Last month the company abandoned hopes for a sales recovery this year amid weak sales, particularly in the US, where high interest rates and inflation have led stores to reduce stocks of spirits.
Rémy Cointreau, whose origins date from 1724, is the product of the merger in 1990 of holding companies owned by the Hériard Dubreuil and Cointreau families, which controlled E Rémy Martin and Cointreau, respectively.