Rémy price hike to offset Chinese tariffs

The chief financial officer for Rémy Cointreau, Luca Marotta, has told investors that the firm will raise Cognac prices in China to mitigate the impact of tariffs imposed on European brandy.

In the company’s sales report for the first half of the year (H1) released last week, the group acknowledged recent decisions by the Chinese Ministry of Commerce (Mofcom) to apply duties of 38.1% on EU brandy from 11 October. It stated the impact ‘would be marginal for the 2024-25 fiscal year, and the group would activate its action plan to mitigate the effects from 2025-26’.

However, Marota has told investors that the company had already conducted research to establish the sales impact of the tariffs, noting that the firm would “be obliged” to increase prices as a result.

The group declined to elaborate on the timing or extent of price increases, or the scale of the potential impact on volumes in China.

The firm’s Cognac sales fell by 17.5% to €341.5 million (US$369.7m) in H1, with second-quarter sales down by 20.7% – a result of destocking and a ‘market impacted by the normalisation of consumption and high interest rates’ in the US, and a change in distribution in Nigeria.

Other drinks firms, including Martell owner Pernod Ricard and Hennessy owner LVMH, have reportedly said they will ‘watch what competitors do’ in terms of price increases before making their own moves.

Elsewhere, Rémy Cointreau has committed to a cost-cutting strategy that totals more than €50m (US$54m), which will impact areas including manufacturing and advertising spend.

Earlier this month, data and analytics company GlobalData warned that the Chinese tariffs would create a challenge for companies, and would lead to price increases for consumers or “reduced profit margins” for the businesses affected.

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