Rémy Cointreau warns of 50-55% sales drop in Q1

French drinks group Rémy Cointreau was “heavily affected” by the Covid-19 pandemic during the fourth quarter of its 2019/20 fiscal year and expects a steep decline in sales for the current quarter.

Rémy Cointreau’s fourth-quarter sales were impacted by the Covid-19 pandemic

Rémy Cointreau reported a 24% decline in sales during the three months to 31 March 2020, largely due to the closure of on-trade venues and a reduction in international travel brought on by the coronavirus pandemic.

Sales during the group’s 2019/20 full year fell by 9% on a reported basis to €1,024.8 million.

For its the 2020/21 fiscal year, Rémy Cointreau anticipates wholesalers’ destocking in Greater China, plus a “sharp slowdown” in European and American markets due to the coronavirus crisis, which the group said is bound to “severely impact” sales during the first quarter of the 2020/21 financial year.

The group forecasts organic sales to decline by around 50% to 55% during the first quarter.

However, Rémy Cointreau added that it anticipates a “very gradual recovery in business” during the second quarter, and reopened its Cognac production site on 14 April and Angers site on 20 April, assuring necessary measures were in place to protect employees’ health.

2019/20 analysis

‘Group brands’ experienced a “moderate decline” of 4% in a “complex public health environment” during the company’s 2019/20 financial year. Rémy Cointreau’s ‘partner brands’ experienced a 68.5% sales drop due to the company’s voluntary withdrawal from some distribution contracts in Europe – including the Czech Republic and Slovakia – and the US.

The House of Rémy Martin experienced an organic 7.5% drop in sales during the fiscal year, but noted “strong growth” in China, driven by the Rémy Martin Club quality.

The house experienced a “mixed” performance in other markets, most notably travel retail, which was first hit by a drop in tourism in Hong Kong before being impacted further due to airport closures as a result of the pandemic.

Organically, Rémy Cointreau’s liqueurs and spirits division fell by 3% in organic terms, attributed to changes to the sector’s distribution network in Europe and the pandemic impact during the fourth quarter in the Asia Pacific region. Liqueurs and spirits enjoyed a “very strong” performance in the US, particularly Cointreau liqueur, The Botanist gin and the group’s portfolio of single malt whiskies.