Remy Cointreau’s quarterly sales beat forecasts

PARIS: French spirits group Remy Cointreau delivered stronger-than-expected first quarter sales as Chinese customers regained a taste for its premium cognac.

Solid double-digit sales growth in China largely outpaced a softer start in Remy’s top US market, which struggled with high yearago comparables when cognac sales had been boosted by price increases, the group said on Thursday.

The maker of Remy Martin cognac and Cointreau liquor, which is accelerating a drive to sell higher-priced spirits to boost profit margins, kept its goal to grow current operating profit on a comparable basis in the current financial year.

Remy Cointreau has been focusing on selling spirits priced at US$50 a bottle or more, as part of a strategy that has benefited from a rebound in Chinese demand.

Remy’s strategy differs from that of rival Pernod Ricard, which has launched less expensive brands in China.

A fast-growing upper middle-class was driving demand in mainland China, while trends were also improving in Macao and Hong Kong, said Remy. Travel retail sales in Asia also benefited from increased spending by Chinese travellers and favourable government measures to develop “domestic” duty free shops in China, it added.

Group sales reached 240.2 million euros (US$277mil) in the three months to June 30, up 8% on a like-for-like basis.

It also beat 0.9% growth in the fourth quarter, and was above analysts’ forecasts for 4.7% growth. Cognac sales, which contribute 65% to group revenue, jumped 18.7% in the first quarter, up from 6.2% growth in the fourth quarter and also above analysts’ expectations of 11.7% growth.

The latest initiatives from Remy Martin cognac included a new expansion for the group in Africa and a new limited edition for its Louis XIII deluxe cognac, The Legacy, which is hand signed by four generations of Louis XIII cellar masters.

Remy Cointreau, Pernod and British rival Diageo have all faced pressure in the past on sales in China, following a crackdown on luxury gift-giving and personal spending by Chinese civil servants.

As a result, Remy shifted its focus to the United States, which is now its top market for cognac, but demand in China has been picking up again.