Hong Kong protests hit Rémy Cointreau Q3 sales

24th January, 2020 by Melita Kiely

French producer Rémy Cointreau reported an 11.3% organic sales decline during its third quarter as Cognac sales were affected by protests in Hong Kong.

Remy-Cointreau

Rémy Cointreau’s Cognac sales were hit by protests in Hong Kong

Rémy Cointreau saw organic sales fall to €285.3 million (US$315.2m) from October to December 2019, down from €321.5m (US$355.1m) during the same period the previous year. This was due to a drop in tourism in Hong Kong, slow stock replenishment in the US and distribution changes, mainly in Western Europe.

House of Rémy Martin saw sales drop to €205.6m (US$227.1m) during the third quarter, down from €222.4m (US$245.7m) the year prior.

Liqueurs and spirits also took a hit, falling from €74.8m (US$82.6m) in 2018/19 to €70.2m (US$77.5m) last year.

Looking at the first nine months of Rémy Cointreau’s 2019/20 fiscal year, sales between April 2019 to December 2019 fell 4.1% to €814m (US$899.2m) compared to the same period the previous year.

The group’s partner brands plummeted 67.5% due to Rémy Cointreau’s voluntary termination of large distribution contracts in the Czech Republic, Slovakia and the US. Rémy Cointreau said this will impact the company to the value of €56m (US$61.9m) on sales and €5m (US$5.5m) on current operating profits for its full 2019/20 fiscal year.

However, sales of the company’s group brands grew 1.6% over the period.

Organically, however, group brands declined 1% over the period. House of Rémy Martin declined by 1.6% over the first nine months, again as a result of a decline in tourism in Hong Kong, slow stock replenishment in the US and distribution changes, mainly in Western Europe.

However, China continued to be a strong market for House of Rémy Martin. Rémy Cointreau said this was all “consistent” with its upscaling strategy.

Liqueurs and spirits flat

The group’s liqueurs and spirits division remained flat during the period, growing organically by 0.7%. Cointreau liqueur, The Botanist gin and the group’s portfolio of single malt whiskies were the driving forces behind this “modest” growth.

However, yet again sales were hit by changes in the group’s distribution network in Western Europe.

It was a similar story for Greek spirit Metaxa, which saw sales slip over the period due to the change of distributors in Central Europe and Germany.

St-Rémy brandy saw sales slow during the nine months, but Rémy Cointreau said the full-year outlook “remains positive” due to the brand’s marketing strategy in the US.

Mount Gay rum also witnessed a decline, which was attributed to a slowdown in shipments as it prepares to the relaunch in the next quarter.

In contrast, The Botanist experienced double-digit growth, boosted by the gin brand’s expansion to the US and Asia.

A statement regarding the group’s outlook said: “On the occasion of its change in general management, the Rémy Cointreau Group has decided to hold off on previously provided annual and mid-term objectives.

“Yet, it confirms the pertinence of its value strategy, aiming at building an ever more sustainable, resilient and profitable business model.

“The publication of the annual results 2019/20, on June 4th 2020, will be the occasion to share the new roadmap of the group’s strategic vision.”

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