Rémy Cointreau still in decline after latest results released

By Erin Smith

Published: 18 July, 2014

Rémy Cointreau released its Q1 2014/2015 results today, reporting organic sales have slipped another 5.7% during Q1 ending on June 30, 2014 with the decline being driven by Remy Martin Cognac revenue continuing to fall another 15%.

The Paris-based Cognac conglomerate has managed to slow, but not stop the losses the company has endured for several consecutive fiscal quarters. Last year in Q3 Rémy Cointreau took a 18.9% hit in sales due primarily to the crack down on austerity measures and luxury gift-giving in China and the company's over-exposure to that market.

Rémy Cointreau Brands Rémy Cointreau BrandsRémy Cointreau Brands

The continued losses for Q1 2014/2015 were a result of issues the company faced on multiple fronts. The continued de-stocking of inventories in China have not yet stabilised. The largest Cognac brand Remy Martin' revenue still suffering double digit percentage losses. Finally the group faced challenging exchange rate issues and the ending of a major contract in the US all attributed to the poor performance.

The negative numbers, said the group, were worsened by "unfavourable movements in exchange rates and the impact of the end of the Edrington contract in the US". The ending of the Edrington contract in April in the US had a negative €27.0 million effect, while the unfavourable exchange rate resulted in a negative €8.2 million.

On the upside, the company did show positive growth for Q1 2014/2015 in both its liqueurs and spirits and its partner brands divisions.

Rémy Cointreau Brands

Liqueurs & Spirits sales grew by 11.3% compared to the same period last year. The growth came from Cointreau solid performance, particularly in the US market, and from the Metaxa brand.

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With the ending of the Edrington contact, the company's main distribution partners are Charles Heidsieck and Piper-Heidsieck Champagnes, some of the William Grant & Sons' spirits and Russian Standard vodkas.

The partners brands grew organic sales by 9.1% primarily due to good performance of spirits distributed in Europe and in travel retail channel.

Rémy Cointreau has been plagued with decline sales and profits throughout most of last year, as well as several key leadership changes that were made. Most recently the company announced the appointment of Valérie Chapoulaud-Floquet as the new chief executive in the hopes of turning the group around. Chapoulaud-Floquet is expected to start in September.