First-half earnings at Remy Cointreau will fall less than feared as a rise in cocktail drinking at home helps to offset a collapse in demand from travel retail and events in the coronavirus pandemic, the premium spirits maker has said.
The maker of Remy Martin cognac and Cointreau liqueur said that its underlying sales plunged 33% in the three months that ended on June 30.
But that was better than analysts' average forecast for a 43% drop, as some drinkers in Britain, Germany and the United States in particular sought to liven up their coronavirus lockdowns by mixing drinks at home.
Cointreau's margarita cocktail, which combines the orange liqueur with tequila and lime juice, was a particular hit in the United States, the French company said.
It now expects core earnings for the six months ended September 30 to fall 35%-40%, compared with a drop of 45%-50% previously.
While US and Asian wholesalers cut inventories and travel retail collapsed in the first quarter, Remy also said that its deluxe CLUB cognac and single-malt whiskies performed well in China.
Finance chief Luca Marotta flagged strong investment in the coming quarters, notably in Cointreau liqueur and branding.
"We need a strong rebound," he said, as the company forecast double-digit growth in China and the United States for the current quarter.
However, analysts at Bryan Garnier pointed to the weakness in travel retail and warned that cash-strapped consumers could trade down from premium brands as economies suffer deep recessions.
Worst Hit And Further Price Hikes
In the first quarter, House of Remy Martin, which makes the group's high-end Louis XIII and Remy Martin cognacs and last year brought in the bulk of sales, was the worst hit, while its liqueurs and spirits division proved more resilient.
The company, the upscale spirits of which can cost thousands of dollars per bottle with custom engravings, plans further price hikes in the autumn as it moves upmarket.