FRANCE – French beverage company Remy Cointreau has reported a substantial 23.5 percent decline in sales for the third quarter of the fiscal year 2023/2024, with a double-digit drop anticipated for the full year.
In the first nine months of the fiscal year, the company’s sales totalled US$1.36 billion, reflecting a 22.7 percent organic revenue decline (26.7% on a reported basis).
The Cognac division was particularly hit, experiencing a 33.9% organic sales decline. For the same period, Cognac generated €613.2 million, down by 35.6 percent compared to the previous year.
The company attributed the decline to ‘major destocking in China and a persistently sluggish market in the United States.’
Rémy Cointreau’s liqueurs and spirits division managed to achieve 4.3 percent organic growth compared with Q2, driven by strong US sales of The Botanist gin and Cointreau. However, compared to the previous year, this division saw a 2.2 percent decline.
Partner brands also faced challenges, with a 13 percent organic decline, attributed to trends in the Benelux and the United Kingdom.
Sales in the Americas, while slightly down, followed a strong second-quarter performance. The company pointed to ‘a fiercely promotional environment and a rise in interest rates’ in the US as contributing factors.
Shipments in Asia Pacific and Europe, the Middle East, and Africa (EMEA) experienced sharp declines.
Remy Cointreau revised its full-year expectations, now anticipating a sales decline of approximately 20 percent.
In response to the challenging market conditions, the company announced a cost-cutting plan estimated at US$108 million. This includes maintaining a strict pricing policy, protecting gross margins in an inflationary environment, selectively reducing marketing spend, especially for the Cognac division, and significantly cutting other operating costs.
Meanwhile, as part of its ‘Sustainable Exception’ plan, Remy Cointreau aims to engage 100 percent of its direct agricultural partners in sustainable farming practices. The company targets a 50 percent reduction in carbon emissions per bottle by 2030.
While addressing a recent anti-dumping investigation into EU brandy by China, Remy Cointreau expressed confidence in compliance with Chinese and international regulations.
The investigation focuses on brandy exports from EU member countries to China in containers under 200 liters for the period between October 1, 2022, and September 30, 2023.
In the report, Remy Cointreau stated, “The Group is convinced that its products and business practices comply fully with Chinese and international regulations and is approaching future discussions with confidence and diligence.”
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