Rémy Cointreau finds renewed spirit in Chinese market

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The maker of Rémy Martin and Cointreau liqueur reported that revenue during the last quarter of its business year reached €251.5m, 9.8 per cent higher in organic growth terms than a year earlier.

The figures, which beat analysts’ forecasts, sent Remy shares 8.5 per cent higher on Tuesday, their biggest one-day gain in more than six years and a high since October 2013.

Rémy Cointreau signalled that China may be rediscovering its passion for cognac after the French spirits maker’s sales outstripped expectations.
Rémy Cointreau signalled that China may be rediscovering its passion for cognac after the French spirits maker’s sales outstripped expectations.

The Paris-based group said the strong figures were “on the back of improving trends in greater China”, where it would start to increase prices this year after gaining market share during the lunar new year.

However, Remy’s management maintained its earlier guidance of positive operating profit growth at constant exchange rates for the full business year — reflecting caution over drawing any hard conclusions.

Andrea Pistacchi, an analyst at Citi, said: “All the trends were directionally as we expected, but stronger.” However he sounded a note of caution, saying “we don’t expect China to improve materially from here any time soon”.

At Rémy Martin, which accounts for more than half group sales, revenues jumped 12.3 per cent in organic terms during the last three months of its business year, driven by solid growth in North America and an improvement in China.

That will come as a welcome interruption to what has been a challenging market in recent years for spirits producers and the luxury sector, as they have had to contend with slower economic growth and a crackdown by Beijing on conspicuous consumption by officials.

During the first quarter of the business year, for example, revenue at Rémy Cointreau shrank 9 per cent in organic terms compared with a year earlier on the back of upheavals in the Chinese market.

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Luxury groups have also had to contend with the difficult market conditions. In February, French luxury goods group LVMH said sales in China were flat last year. But it managed to compensate for the lack of growth with robust sales in other regions, suggesting that it had managed to appeal to Chinese tourists travelling abroad.

For the full business year, group revenue at Remy reached €1.05bn, 0.3 per cent higher in organic terms than the previous year — and 8.9 per cent higher in reported terms.

By Adam Thomson Courtesy Financial Times

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