Rémy Cointreau experiences accelerating second-quarter growth; confirms full-year guidance
12% increase in Rémy Martin Cognac sales drives Rémy Cointreau growth.
Rémy Cointreau (RC) reported its financial results today for its first half of quarter for the period of April-September 2018/19. Overall sales were €571.4 million in the first half, up 7.7% from the comparable half year of April -September 2017/18. Revenues at RC were negatively impacted by unfavorable currency effects. Without such currency impact, sales were up 5.0%.
According to RC the House of Rémy Martin supported the company’s results with ‘remarkable growth” in the Asia Pacific and U.S. markets. Rémy Martin Cognac sales grew 11.7% in the first half from the comparable first half of 2017/2018.
RC is the owner of Rémy Martin Cognacs, Cointreau, Metaxa, Mount Gay Rum, St. Rémy French brandy and Progressive Hebridean Distillers.
Strong sales growth at the House of Rémy Martin outpaced growth at Hennessy. Hennessy revenues grew 4% in the first nine months of 2018.
Over 90% of Rémy Martin global cognac sales are derived from Grand Champagne Cognacs and an even higher percentage of revenues are attributable to their aged cognacs like Rémy Martin V.S.O.P., 1738 Accord Royal and X.O. Excellence. In contrast, Hennessy’s cognac sales are evenly divided among V.S., V.S.O.P and X.O. cognacs. The American market accounts for the bulk of the Hennessy V.S. sales and older cognacs are sold predominately in China and the rest of Asia.
RC noted that growth in Cognac sales was “thanks to continuing excellent trends in Greater China, as well as in other key markets in the Asia Pacific Region (Singapore, Australia and Japan) and in travel retail”. Rémy Martin is a producer of Fine and Grand Champagne Cognacs and generally does not compete at the V.S. designation, choosing instead to utilize its Petit and Grande Champagne eaux-de-vie to make longer-aged cognacs like 1738 Accord Royal, its V.S.O.P., XO Excellence and Louis XIII cognacs. Rémy Martin also produces the ultra-upscale cognac, Louis XIII.
The exceptional performance of Rémy Martin Cognacs was due to an increased focus on higher-end Cognacs and marketing those Cognacs in Asia and the Americas. Rémy Martin’s high-end strategy is paying off as sales and profits are increasing. Cognac sales in China in recent years had fallen off as the country cracked down on conspicuous consumption. Rémy Cointreau has noted, however, that the situation appears to be changing as its Chinese sales picked up sharply in the second half of last year and continues through mid-2018.
Marketing Initiatives Drive Rémy Martin sales
RC noted that in fiscal 2018 Rémy Martin sales benefited from the introduction of two new Louis XIII boutiques – one at Harrods in London and the other at Xian in China.
Rémy Cointreau confirmed its forward guidance of the rest of the year based on the strong first half performance. RC noted “on the heels of this positive first half performance…[we] confirm guidance of growth in current operating profit over the financial year 2018/19, assuming constant exchange rates and consolidation scope.”
