Remy Cointreau Suffers Sales Drop Due to China Trade Measures
Remy Cointreau SA suffered a further drop in Cognac sales, as anti-dumping measures in China continued to limit demand in its key market.
The Remy Martin Cognac maker, which is hunting for a new chief executive ahead of Eric Vallat's planned exit this summer, said organic revenue fell 19% in the fourth quarter, a bigger decline than analysts had expected.
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Forbes
15 hours ago
- Forbes
Martell Makes Bold U.S. Move To Lift The Cognac Market
Martell is making a play for the cocktail space. 'Make It With Martell' is an expression that American consumers will encounter from this summer onwards as the cognac brand puts in place a new strategy to persuade drinkers to replace key spirits in their favorite cocktails with Martell. Leading the charge is acclaimed mixologist Rémy Savage, whose multiple projects include the lauded Bauhaus-inspired A Bar with Shapes for a Name in East London. Savage's team has created a series of cocktails for Martell designed to redefine traditional ways of making popular mixed drinks; from a negroni and margarita, to mint julep and mojito. On World Cocktail Day on June 5, Savage and Martell's global marketing director, Sébastien Borda, jointly reopened L'Indigo Bar, in Cognac, France. This marked the official summer residency of the mixologist at the rooftop venue at the Martell Foundation, said to be the highest point in the town with spectacular 360-degree views of the region. More importantly, the opening sets in motion the 'Make It With Martell' global campaign, starting in the United States—the world's biggest cognac market by volume—where a series of cocktail programs will begin across bars, hotels and other hospitality venues in big cities. Together, these activities form part of a bigger, sustained strategy that is, in effect, a new platform designed to make Martell a go-to substitute spirit in popular cocktails—and the entire cognac category by extension. Swapping out key spirits in favorite cocktails is a bold move, but Martell is convinced it is on the right track, not least because it takes cognac back to its often forgotten roots when it was a well tried and tested spirit in mixed drinks. The 1930s book 100 Famous Cocktails prepared in collaboration with Oscar Tschirky, maître d'hôtel of the Waldorf-Astoria Hotel in New York, lists a series of cocktails with cognac at their core. Cognac was a popular choice in cocktails in the past according to Oscar of The Waldorf. Bringing cognac back to the center of cocktail culture is now a primary objective for Maison Martell, founded in 1715. As the oldest of the four major cognac houses which include Campari-owned Courvoisier, Hennessy, and Rémy Martin, it is perhaps fitting that it is taking a lead in a revival. In his first interview since talking the marketing reins at the brand a year ago, and referencing the new campaign, Sébastien Borda told 'This is really a central point of our strategy. The Martell business is heavily reliant on Asia and, as we know, the context is quite difficult. So we are accelerating our efforts in the U.S and Africa as regions for potential growth.' Make It With Martell is kicking off in the United States because its parent, drinks giant Pernod Ricard, regards the country as an opportunity for expansion. In mid-May, Conor McQuaid, chairman and CEO of Pernod Ricard North America said that while consumers were 'making more cautious choices', spirits were continuing to take share from beer and wine. In 2024, spirits represented 42% of beverage alcohol in value versus 35% a decade ago. Sébastien Borda: 'We feel that cognac, and Martell in particular, can take on any classic and bring ... More something new to the on-premise.' The CEO added: 'Cocktail culture is thriving, especially with cordials and RTDs having doubled in size over the past few years and still growing at 20% year-over-year.' Borda commented: 'In the U.S. we will push into the on-premise where the cognac category hasn't been particularly active. We want to be part of what will probably be a broader movement, with other cognac houses also playing their part.' Something has to change as cognac sales have been under immense pressure. In the first calendar quarter of this year, Pernod Ricard—whose brands include Absolut, Chivas, and Jameson—noted a 4% decline across its strategic international labels. Good growth for Jameson, Chivas Regal, Ballantine's and Absolut was undone by declines at Martell and Royal Salute whisky. Swapping out the gin for cognac in a Negroni makes for a smoother sip, according to Rémy Savage. In the same period, rivals saw even greater falls. LVMH's cognac and spirits sales were down by 17%, hit by soft demand in the U.S. and China, while Rémy Cointreau saw sales in its cognac division plunge by 33% on an organic basis in the quarter. The uncertainty around Trump's tariffs has not helped. Martell's strategy rests on its belief that its liquid—made by distilling clear wines as its point of differentiation—is highly suited to mixing, especially at the VS and VSOP entry level. This can bring new consumers into the category. 'Some see cognac as only for certain types of (more formal) occasions but we're going to show them that it can make perfectly balanced, rich, aromatic cocktails,' said Borda. Rémy Savage: 'Through experimentation I found that cognac was a very generous dance partner due to ... More its complexity in the wood and aroma.' The cocktail scene is already thriving in the U.S. so Martell will bring an air of experimentation and exploration to the market. The marketing director added: 'We believe we can come in with something that will surprise consumers.' Challenging the mainstay classic cocktails market is a brave move but it was something that Savage had already toyed with in the past due to his love of cognac. He said: 'Through experimentation I found that cognac was a very generous dance partner due to its complexity in the wood and aroma. We pushed it to see how far it could go, and it goes a long way. We're talking about the democratisation of cognac; to make it for everyone.' Borda said: 'When you have one of the top mixologists in the world taking this approach with such passion and conviction, we feel that cognac, and Martell in particular, can take on any classic and bring something new to the on-premise.' Savage is spinning several plates at once. He has six bar businesses on the go: two in London, two in Paris, one in Lyon, and one in Bordeaux, with an Art Deco-themed New York oyster bar bar opening shortly, and a further venue coming in Mexico. The cognac collaboration is the only one he has with a drinks brand in any category, and he is not looking for others. Savage said: 'With Martell it's like we've been dating for four years and, this summer, we're finally moving in together. I am doing it because I want to. I have always been in love with cognac and this has led me to Martell.' With his New York bar about to open, and Savage's genuine belief that cognac cocktails have a future—picking up from where they left off last century—Martell could just have found the right formula, and team, to turn the category around, starting with the U.S. before expanding to the rest of the world. The Make It With Martell campaign will launch in key cities such as New York, Chicago, Atlanta, Washington, Houston, and Los Angeles. Borda said: 'It is a new, permanent platform that we strongly expect will drive sales and help us to modernize and create a different image for cognac that, in turn, will contribute to more dynamism at Martell. We will be adapting the cocktails to different seasons and the platform will be central to our future marketing and brand plans.'
Yahoo
3 days ago
- Yahoo
The challenges facing Rémy Cointreau's new CEO
In under three weeks, former Shiseido and Chanel executive Franck Marilly will take the hot seat at Rémy Cointreau, joining a business where sales and profits have tumbled over the last 12 months. Marilly is also taking the helm at a spirits group where Cognac, a category under significant pressure in recent quarters, accounts for around 70% of sales. It's clear the new Rémy Cointreau CEO will have plenty in his in-tray and, while market watchers have a number of questions about the company's near-term prospects, there are, it's argued, some fundamental questions about the make-up of the business. The group's last financial year, which ran until the end of March, was another tough period for the Rémy Martin Cognac maker. Net profit decreased 34.4% to €121.2m ($138.4m), or by 36.8% organically. Operating profit was down 27.6% at €211m. The Bruichladdich whisky owner posted an 18% decline in full-year sales to €984.6m. It was the second successive year when sales and earnings declined. Rémy Cointreau was hit by falling Cognac sales amid a struggling category in the US – one of the two biggest markets for the spirit – and pressures in China, the other principal destination. The company has sought to point to positive signs for its Cognac business in both markets. In the Americas, fourth-quarter sales 'rebounded sharply', particularly in the US. Rémy Martin, the group added, had gained market share in China despite the 'persistently challenging market conditions' in the country. Marilly will take the reins as CEO as Rémy Cointreau nears the end of the first quarter of its new financial year and the market's eyes this week were on the company's thoughts for its 2025/26 fiscal period. The Cointreau liqueur maker expects sales to return to 'mid-single-digit growth on an organic basis'. It said the recovery would be 'driven primarily by a strong technical rebound in sales to the United States' starting in the first quarter. However, in a sign of the macro uncertainty hanging over Rémy Cointreau's Cognac business, its guidance for its so-called current operating profit came with a caveat. Tensions over tariffs, not just on imports to the US but on EU brandy shipments to China, meant Rémy Cointreau's projection for current operating profit was for growth 'in the high single-digit to low double-digit range' – but 'excluding any increase in customs duties in China and the United States'. At the moment, the company's 'worst-case scenario' is for the potential increase in tariffs to amount to €100m gross. This embedded content is not available in your region. Alongside the publication of Rémy Cointreau's full-year profits yesterday, the company became the latest major distiller to withdraw mid-term guidance. The group pulled its objectives for 2030 – drawn up a decade ago – pointing to 'the continued lack of macroeconomic visibility', tensions over tariffs and uncertainty over when the US market would recover. In February, Diageo pulled its medium-term guidance, citing 'macroeconomic and geopolitical uncertainty'. The same month, Pernod Ricard cut its sales forecasts, saying 'intense geopolitical uncertainties' were hitting the spirits sector. Analysts expected the withdrawal of Rémy Cointreau's guidance and more attention is on the near-term prospects of the company's Cognac portfolio in the US and China and, more broadly, how tariffs could impact the business. 'Management provided a more nuanced view of US depletions, confirming that while volumes remain mid-single-digit negative, the trend is improving sequentially. Notably, VSOP depletions are nearing flat, supported by tactical pricing actions and smaller formats,' Barclays analyst Laurence Whyatt wrote in a note to clients. He added, however, that outgoing CEO Eric Vallat has 'cautioned that it is still too early to declare a full sell-out recovery'. Across the Pacific in China, market conditions for Cognac are challenging for all brands, even if Rémy Cointreau has been able to eke out some market share gains for part of its portfolio, though, as Bernstein's Trevor Stirling says, it's unclear whether that progress has been achieved across the range. 'The Chinese market remains very weak with no near-term upside visible,' Bernstein said yesterday. 'However, Rémy has been consistently gaining share in XO, VSOP and e-commerce, though there was no mention of Louis XIII.' Reflecting on a post-results call between Rémy Cointreau and analysts, Whyatt said the company's management believes it can use the expected improvement in sales to bolster its position against any changes in tariffs. 'It clarified that the assumed €65m net tariff impact could be mitigated more aggressively than previously guided,' Whyatt said. 'Management now believes mitigation could reach 50–60% – up from the 35% initially communicated – if top-line momentum improves. This would reduce the net impact on current operating profit to €25–30m, suggesting a less severe downside scenario than originally feared.' It all adds to the impression that Marilly is walking into a pretty tough job. There are attributes of Rémy Cointreau's business that provide grounds for optimism. Its Cognac portfolio has a more premium bent that a few years ago, while its Liqueurs & Spirits – home to brands like Bruichladdich, Cointreau and The Botanist gin – has seen its organic sales jump by more than a third over the last five years (even if they fell by 9% in 2024/25). However, perhaps Marilly's fundamental task is to make Rémy Cointreau a broader business, one less reliant on Cognac. 'His big challenge is to further de-risk the company, diversify away from Cognac and diversify away from the US and China. Rémy Cointreau is just too dependent on those two countries and on the Cognac category,' one analyst who wished to remain anonymous said. That, of course, will take time – and require the company to be active in the M&A market. Last year, Rémy Cointreau set out plans to find €50m in costs during the fiscal period. Rémy Cointreau said yesterday it had extracted €85m over the last 12 months – and €230m over the last two years. It described more than half over those cuts as 'structural savings'. The group's net debt to EBITDA ratio stands at 2.4 times, providing, the unnamed analyst suggests some room for manoeuvre. 'The balance sheet is not too stretched and doesn't allow for massive acquisitions but there's ways around that if needed,' they said. 'It is important to make a clear step towards a more diversified structure from a category perspective and geographically.' Elsewhere in spirits, the likes of Diageo, Pernod Ricard and Campari have either sold assets in recent months, or have signalled more will follow. Those brands, however, have tended to be away from the more upmarket products Rémy Cointreau has tended to reach for in the past. The conundrum for the new Rémy Cointreau CEO will be finding the right kind of 'premium' asset, which more often than not are either small – so may not immediately help in any attempts to diversify – or be pricey. 'It has to do something with what they call terroir, preferably, with ageing, with a good story behind it,' the analyst says. 'That could be in Tequila, that could be in whisk(e)y, where I also would see probably the best fit with the company, probably the best growth opportunities. 'It would make sense to some extent, to make perhaps a little bit of a bolder move, because if you buy smaller brands, it's going to take a long time before you actually shift the balance a bit towards less Cognac. I know there's probably less opportunities when you think about bolder moves but it's definitely something that I think the board should consider.' "The challenges facing Rémy Cointreau's new CEO" was originally created and published by Just Drinks, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.
Yahoo
3 days ago
- Yahoo
Remy Cointreau (REMYF) Full Year 2025 Earnings Call Highlights: Navigating Challenges with ...
Revenue: EUR984.6 million, representing an 18% organic decline. Current Operating Profit (COP): EUR217 million, down 13.5% organically. Organic COP Margin: 21.6%, a deterioration of 3.9 points organically. Gross Margin: 70.6%, declined by 1 point due to cost production inflation and negative price/mix effect. A&P Expenses: Reduced by 1.1 points, now 20.3% of sales. Cost Savings: EUR85 million in '24/'25, totaling EUR230 million over two years. Net Financial Debt: EUR675.4 million, up EUR25.7 million from March '24. Net Profit Group Share: EUR121.2 million, net margin of 12.3%. Earnings Per Share (EPS): EUR2.36, down 35.3% year-on-year. Free Cash Flow: EUR19.2 million in '24/'25. Dividend Proposal: EUR1.5 per share, with EUR1 in cash and EUR0.5 in cash or shares. ROCE: 10.3%, down 5.2 points on a reported basis. Warning! GuruFocus has detected 7 Warning Signs with REMYF. Release Date: June 04, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Remy Cointreau (REMYF) maintained a strong gross margin of 70.6% despite challenging macroeconomic conditions. The company achieved significant cost savings, totaling EUR230 million over two years, with a focus on structural savings. Cointreau gained market share by leveraging the growth of cocktails, particularly in the US, and is exploring new consumption occasions. The Botanist brand has become accretive for the group, benefiting from the portfolio strategy beyond Cognac. Remy Cointreau (REMYF) made substantial progress in sustainability, achieving a 12% reduction in carbon emissions and a 53% reduction in net water consumption. Group sales declined by 18% organically, reflecting broader macroeconomic challenges. The US market remains challenging, with no clear signs of a rebound in sell-out trends. Potential tariff increases in China and the US could have a significant negative impact on financial performance. The company withdrew its '29/'30 objectives due to persistent macroeconomic uncertainties and tariff risks. The Cognac category, particularly in the US, faces challenges in recruiting new consumers beyond its existing core clientele. Q: In the US, are depletion trends close to flat, and how does this relate to sell-out trends for Remy Cointreau and the Cognac category? A: Eric Vallat, CEO, explained that depletions are close to flat but still slightly negative, showing sequential improvement. Actions on pricing, particularly for VSOP, have had a positive impact, though not fully implemented. It's too early to confirm if sell-out is back to growth, but stock levels are healthy, and the company is confident in sell-in recovery. The challenges are seen as cyclical, with a focus on recruiting beyond the existing clientele. Q: What are the sensitivities around potential tariffs on EU imports, and how much of the impact can be mitigated? A: Luca Marotta, CFO, stated that theoretically, a 20% gross impact from tariffs is possible, but the actual impact will depend on various factors, including phasing and volumes. The company aims to mitigate the net impact through strategic actions, projecting to offset more than 35% of the total effects, potentially reaching EUR50-60 million in savings. Q: What is needed to drive a spark in the Cognac category in the US, and how does pricing play a role? A: Eric Vallat, CEO, believes the issue is not solely price-related, as depletions are negative across the board except for tequila and cocktails. Psychological pricing is important, but the main challenge is recruiting beyond the existing clientele. The company plans to invest in communication and activations to rebuild desirability and expand its consumer base. Q: Can you provide insights into the long-term outlook for top-line growth and cash flow, considering the withdrawal of midterm targets? A: Eric Vallat, CEO, emphasized that the withdrawal of targets is due to tariff uncertainties rather than top-line potential. He believes there is significant growth potential in China and the US, with a focus on expanding geographical footprint and non-Cognac brands. Luca Marotta, CFO, added that strategic ODV investments and CapEx are being optimized, with a focus on maintaining a strong cash flow position. Q: How are stock levels across different regions, and what is the focus of marketing spend? A: Eric Vallat, CEO, reported that stock levels are healthy worldwide, with four months in the US and stable in China and Europe. Marketing spend is prioritized based on brand and market potential, with a focus on digital and below-the-line activities. The company aims to maintain a 20% A&P ratio, with adjustments based on market dynamics and brand needs. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Sign in to access your portfolio
