(Reuters) – French spirits maker Remy Cointreau reported a slightly larger-than-expected drop in first-quarter sales on Wednesday as problems at its U.S. cognac division spilled over into its liqueurs and spirits division.
A sluggish market in China and deteriorating consumption in Southeast Asia also weighed on the quarter.
The group, whose key markets are the United States and China, published a turnover of 217 million euros for the quarter ended June 30, down 15.6% in organic data, while analysts were expecting a drop of 13.6% to 220.4 million euros according to a consensus provided by the company.
The maker of Remy Martin cognac and Cointreau liqueur had already warned that its first half would be difficult due to ongoing problems in the United States and the sluggish economy in China, its two main markets for cognac.
However, the cognac division performed better than expected, posting a quarterly sales decline of 12.2% in organic terms, compared to an expected decline of 17.4%, according to the consensus provided by the company.
Cognac represents around 70% of the French group’s sales.
Sales at the liqueurs and spirits division, which houses brands such as Cointreau, The Botanist gin and Bruichladdich whisky, fell 20.4%, more than double the 8.2% decline expected by consensus.
Spirits makers are seeing a sharp slowdown in sales after the post-COVID boom, when consumers flocked to expensive booze and producers raised prices.
Rémy Cointreau, however, has faced more serious problems in the United States, where demand for cognac has slowed, retailers and wholesalers have reduced inventories and competitors are offering aggressive promotions.
These trends continued to weigh heavily on the cognac division, the group said, and hit the liqueurs and spirits division harder than before.
The company reported that the division recorded a sharp decline in sales in Europe, penalized by inflation and increased promotional activity by competitors. The business was also affected by the slowdown in consumption in South East Asia and continued destocking of the whisky category in China.
Remy described the Chinese market as “sluggish.”
Despite everything, the group confirmed its annual outlook for the 2024-2025 financial year, which it considers to be “transitional” with a gradual improvement expected throughout the financial year.
(Written by Diana Mandiá, with Emma Rumney, edited by Blandine Hénault)
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