Remy Cointreau faces fight to sell Champagne brands

Rémy Cointreau has put its Champagne brands up for sale, but there is a big question mark over who might be interested in snapping them up.

The company put the Piper-Heidsieck and Charles Heidsieck brands on the market as it seeks to increase its focus on its more profitable Cognac unit and has hired Credit Agricole-CIB to find a buyer.

Even though the brand names themselves may carry a fair amount of prestige, Rémy Cointreau’s Champagne division makes less money than those of competitors such as Pernod Ricard, LVMH, Laurent-Perrier and Vranken-Pommery.

The Champagne unit reported a loss of €4 million on sales of €96.6m last year, while staff walked out back in February following the announcement of a restructure which led to 45 job losses.

The group has decided to bite the bullet despite seeing a sales increase of 15.7% in the first half of this year compared to the first six months of 2009.

Analysts value the unit in the region of €320m, but it is unlikely that many of the industry’s big-hitters would be interested in acquiring the brands.

Diageo has made no secret of its aspirations to acquire the remaining 66% of LVMH that it does not already own, and it is very difficult to imagine the world’s biggest drinks firm burning its bridges on that front just to acquire poorer-performing Champagne brands.

Likewise Pernod Ricard chief executive Pierre Pringuet said just last week that the French group, which already owns Mumm and Perrier-Jouët, is not in the market for any other Champagne brands or houses.

More likely is the possibility of a private equity group stepping up to the plate to take the brands off Rémy Cointreau’s hands, but the situation is further complicated by the fact that the restructure announced back in February is yet to bear fruit.

Furthermore, potential investors might be put off by the fact that, despite being recognised brands with well-established international credentials, a company as experienced in drinks as Rémy Cointreau has not been able to do much with them.

Credit Agricole-CIB might have to pull a rabbit out of the hat if they are to convince potential buyers of the viability of such a deal.

Alan Lodge, 17.11.2010