Rémy Cointreau beats expectations but warns challenges ahead

Rémy Cointreau has reported annual profits are up 16.2% last year, but warned of challenges in the US market, especially during the first half of 2023.

The company, which includes brands such as Rémy Martin and Cointreau, restated it expected flat sales and weaker demand in the American marketplace although still up on pre-pandemic levels – and it expects ‘strong growth’ in the rest of the world.

In its financial statement, it said: “In 2023-24, Rémy Cointreau anticipates a continued strong normalization of consumption in the United States, at a level that will nonetheless remain significantly higher than in 2019-20.

“At the same time, the Group expects strong growth in the rest of the world, led by major gains in China, a very good showing in EMEA and the Rest of Asia, and business similar to levels observed in 2019-20 in Travel Retail.”

In terms of sales, it reported ‘robust growth’ in the APAC and EMEA regions, growing 7.6% on an organic basis, which was 41.3% up on 2019-20 levels, before the pandemic altered drinking consumption patterns. It also said there was a ‘slight retreat’ in America, again highlighting changes in consumer behaviour.

Sales and outlook

Full-year sales at the Liqueurs & Spirits division were up 18.7% on an organic basis, including volume growth of 8.3%, and Partner Brands were down -5.3%, reflecting a high basis of comparison with the first half of the year, notably in the Benelux, it said.

The company said that against the current backdrop it expected sales to remain stable in 2023-24 with a ‘strong sales decline’ in the first half, ‘reflecting a very strong fall in the United States and high bases for comparison’, it said.

But it also said there would be a ‘strong recovery’ in the second half, which would be ‘driven by a sharp rebound in the US starting in the third quarter’.

Solid gains

Chief Executive Officer Eric Vallat said: “Rémy Cointreau had a record year, and we have increased our advance on achieving on the 2030 strategic roadmap. This strong showing confirms the relevance of our value-based strategy, which is underpinned by a “Drink less but better” trend. It also reflects solid gains made in achieving our four strategic priorities and the rising desirability of our brands.

“With the normalization of consumption in the United States amplified by high basis of comparison in the first half and our drive to reduce inventories we expect sales and profitability to hold steady in 2023-24 on an organic basis. We are heading into the new year with confidence and resolve, and we anticipate a steep second-half recovery in the United States combined with a new year of buoyant growth in the rest of the world, particularly in China.”