(News Bulletin 247) – The spirits group is under pressure on the stock market as a Trump victory could raise the risk of a reinstatement of customs duties on imports of wine, cognac and Scottish whiskeys. However, Rémy Cointreau is the French listed group most exposed to this risk.

Already hard hit by a difficult economic situation, Rémy Cointreau lost more than 5% on the Paris Stock Exchange while Donald Trump’s victory brought to the fore a new risk for the spirits group.

Rémy Cointreau has been identified as one of the companies most likely to suffer from protectionist measures included in the Republican candidate’s platform. He risks reinstating customs duties on imports of wine, cognac and Scottish whiskeys. This 25% customs tax was suspended by the Biden administration.

The United States an important market for Rémy Cointreau

If it were reinstated, Rémy Cointreau would be affected first, because its cognac sales in the United States generate 30% of its operating profit, Oddo BHF indicated in a note published last October. Under certain assumptions, the broker calculates an annual loss in operating profit of around 40 million euros (for a total result of 305 million euros in 2023-2024).

Pernod Ricard, which has a more diversified portfolio, would suffer much less. However, the stock is also under pressure and lost 3.8%, showing the second biggest drop in the CAC 40 on Wednesday.

Collateral victims of commercial games

Rémy Cointreau and Pernod Ricard are dependent on political decisions. At the beginning of October, these two stocks had clearly suffered on the stock market, buckling under Beijing’s decision to apply security deposits on cognac imports, a prelude to customs surcharges.

The measures taken by China respond, in fact, to the increase in customs duties desired by the European Commission on automobiles produced in China.

In addition to political risk, alcohol producers must deal with volumes at half mast, after strong post-covid demand, and high stocks in the United States. At the end of October, Rémy Cointreau had lowered its objectives for its staggered 2024-2025 financial year, now anticipating a double-digit organic drop in revenue, while Pernod Ricard still intends to achieve a like-for-like increase in its 2024-2025 turnover.