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Rémy Cointreau warns of continued China woes

Rémy Cointreau has warned China’s “campaign to promote morality” will continue to adversely affect sales of ultra-premium spirits in the Chinese New Year.

Plummeting sales of Rémy Martin’s Louis XIII in China are severely impacting the group’s profits

The warning came as the French drinks group reported a 18.3% global organic sales decline for its Rémy Martin brand in the first nine months of the year, a fall attributed to China’s crackdown on luxury gifting.

The Cognac brand, which has reported “good results” in the US, Russia, Japan and Africa, saw organic sales plummet 32% in Q3 alone, from €213m in 2012/13, to €138.7m in 2013/14.

Rémy Martin’s negative growth so far recorded this year has severely impacted the group’s overall performance in the first nine months of the financial year. Organic sales fell 9.4% from €964.5m to €845.7m.

However, Rémy Martin is continuing to pursue “its dynamic branding and commercial policy through sustained and targeted investment” in the foreseeable future.

Rémy Cointreau’s liqueurs and spirits division, which includes the Mount Gay rum, Metaxa and Cointreau liqueurs and Bruichladdich single malt Scotch whisky brands, achieved organic sales growth of 6.3% during the nine months.

However the growth will not be enough to offset a “significant” double-digit decline in total operating profit in the end-of-year financial results in November 2014.

“The Group will resolutely pursue its strategy of developing its brands across all regions,” Rémy Cointreau said in a statement. “The value adding and long-term strategy will remain unchanged.”

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