Remy Cointreau Gives Upbeat Outlook, Weathering China COVID Woes

By Dave Simpson
Remy Cointreau Gives Upbeat Outlook, Weathering China COVID Woes

French spirits group Remy Cointreau RCOP.PA has said that it was confident over prospects for this year, predicting a strong start to business in its first quarter to June amid COVID-linked restrictions in key market China.


For its fiscal year ended 31 March, the maker of Remy Martin cognac and Cointreau liquor kept a forecast for "very strong" organic growth in operating profit as it reported a sales rise of 27.3%, in line with expectations.

Due to higher marketing and communication spending and a tougher comparison base in the second half, year to March 2022 profits - which Remy will unveil in June - would be driven solely by first-half growth, the group reiterated.

The market consensus is for organic operating profit growth of 38%.

Finance chief Luca Marotta told analysts that fiscal year 2022/23 would be "a strong year of pricing power at group level", with cognac price increases in a high single to double-digit range in the United States.


The company was also targeting double-digit organic sales growth in the first quarter, notably driven by US revenues, he said.

The pandemic has helped Remy's drive towards higher-priced spirits to boost profit margins long term, accelerating a shift towards premium drinks, at-home consumption, cocktails and e-commerce.

"Its high-end positioning, the strong level of desirability of its brands and the rarity of its eaux-de-vie and aging spirits give it excellent pricing power," the group said in a statement.

"Q4 sales broadly in line, confident tone on outlook despite China lockdown should re-assure," Credit Suisse analysts wrote in a note.

Group sales for the year were €1.313 billion, an organic rise of 27.3% in line with a company-compiled consensus, thanks to strong demand for premium cognac in China, the United States and Europe.


Full-year sales at the Remy Martin division, which makes the bulk of group profit, rose 26.3%. In China, cognac sales grew at a double-digit rate.

In the fourth quarter alone, organic cognac sales fell 16.7%, compared with expectations of a 15.9% decline.

This reflected a previously flagged voluntary management by the group of its strategic inventory ahead of sharp 1 April price increases, as well as the impact of COVID-related lockdown measures in China in MarchIn mainland China alone, cognac sales showed a double-digit fall in the fourth quarter.

Pernod Ricard

Larger spirits rival Pernod Ricard PERP.PA said on Thursday 28 April that COVID-19 restrictions in China, the war in Ukraine, and a normalisation of its US business could mean softer sales in its April-June fourth quarter.

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.