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Rémy Cointreau expects major FY sales slump
French firm Rémy Cointreau predicts full-year sales to drop by up to 18% as the group aims to ‘accelerate’ its business beyond Cognac.
The French spirits producer confirmed that its consolidated sales for the first half (H1) of its 2024/2025 fiscal year fell by 15.9% to €533.7 million (US$577.6m), which were previously revealed in October.
The company’s Cognac sales (representing 64% of the group’s total H1 sales) plunged by 17.5% to €341.5m (US$369.7m) between April and September 2024, while the Liqueurs & Spirits division (which holds a 34% share of H1 sales) dropped by 12%.
The group had noted at the time that its full-year sales were expected to drop by double digits and its latest financial report has now estimated the decline could be within a range of 15%-18%.
The consolidated sales figures were announced on the same day as Rémy Cointreau’s acquisition of a minority stake in EcoSpirits.
Éric Vallat, CEO of Rémy Cointreau, said: “In a complex economic and geopolitical context, Rémy Cointreau was able to hold margins steady in the first half of the year through rigorous cost management and our now more agile organisation.
“While the US recovery is expected to be very slow, recent encouraging signs for Cognac plus resilience observed in Liqueurs & Spirits confirm the relevance of our strict pricing strategy.”
In China, Vallat noted that the group “gained market share” through its innovation and e-commerce efforts.
For the second half of its fiscal year, Vallat hopes the group will benefit from its cost-cutting strategy, which totals more than €50m (US$54m).
He adds that the company will start to reintroduce “targeted investments in marketing” from the second half of the year to “support peak activity” in the US and China.
The group said its key priorities were to return to growth in the US, ‘leverage its strengths to tackle adverse market conditions’ in China, drive future growth by ‘accelerating’ the business beyond Cognac (through its Cointreau and The Botanist brands), and explore growth opportunities outside of the US and China.
Within the US, the group noted that its Rémy Martin brand is ‘outpacing’ the Cognac category. Citing SipSource wholesaler data for the end of September 2024, it noted that Rémy Martin was down by 12% in the past three months and declined by 12% in the past year. In comparison, the Cognac category (US$50-US$99.99) posted a 15% drop in the past three months and a 16% decrease for the past 12 months.
Update on China import tariff
The group acknowledged recent decisions by the Chinese Ministry of Commerce (Mofcom) to apply duties of 38.1% on EU brandy from 11 October. The firm reiterated that the impact would be ‘marginal’ for the 2024-25 fiscal year, and an action plan would be activated to mitigate the tariff’s effects for the next financial year.
At the end of October, Rémy Cointreau chief financial officer Luca Marotta told investors the firm would raise Cognac prices in China in response to the tariffs.
On 11 November, Mofcom announced a bank guarantee would be accepted as a way of meeting the deposit requirement, with the final amount expected to be confirmed by 5 January 2025.
Rémy Cointreau said it contests the methodology used to calculate these duties, noting that they are not reflective of its export model focused on the premium segment. The group said proceedings are currently underway and that the outcome is ‘uncertain’.
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