Remy Cointreau Q1 revenue slip -2.1% on weaker sales in China

French spirits maker Remy Cointreau reported a -2.1% revenue decline in the first quarter (April – June) of 2016/2017 fiscal year.

The maker of Remy Martin, Cointreau Liquor, Mount Gay, among others said that €218.6m ($241m) revenue recorded in the first quarter as against €223.3m in the same period in 2015 was partly due to weaker sales of its premium cognacs in Asia and advance shipments in the previous quarter ahead of price hikes.

However, the company said that the results were in line with their expectations and represents a good performance following growth of 10% in the fourth quarter of the 2015/16 fiscal year. It added that the first quarter does not traditionally make a significant contribution to annual sales.

By region, the group saw strong demand for its premium cognacs in the United States, its biggest market (contributing 45% of group sales) with a double-digit growth in sales as demand for its Remy Martin XO, 1738 and Louis XIII cognacs lifted group sales.

However, the company said that sales of Cognac which represents 59% of group revenue slid 0.5% in the quarter, a sharp decline from 12.3% growth recorded in the previous quarter.

While the company saw strong revenue growth of its premium cognacs in the United States, the company reported “one-off” declines in Europe, Middle East, Africa (EMEA) and Asia Pacific regions respectively.

However, the company noted that the environment in China was improving as sales from wholesalers to retailers climbed into the mid-single digits in volume and in value.

Remy Cointreau, like other large spirit companies such as Diageo and Pernod Ricard suffered declining sales in China when the Chinese government cracked down on corruption and conspicuous consumption since 2014.

The company said that demand for its premium cognac, Remy Martin started to improve in China in the second-half of 2015/2016 fiscal year and that trend is continuing.

The Liqueurs and spirits division saw a slight decline in Cointreau sales, blamed on timing of Easter and early orders ahead of first quarter price increases.

Remy Cointreau said that strong performance of St-Remy XO was masked by a decline in sales of entry-level products in Nigeria. Cointreau said it expected sales to accelerate in the next few months.

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