“Remarkable Growth” in Cognac Sales to China Drive Sales Increase in First Quarter 2018/2019 at Rémy Cointreau.
Rémy Cointreau (RC) announced its financial results today for its first quarter for the period of April-June 2018. Overall sales were €241.5 million in the first quarter, up just 0.5% from the comparable quarter of April -June 2017. Revenues at RC were negatively impacted by unfavorable currency effects. Without such currency impact, sales were up 5.9%.
It was the House of Rémy Martin revenues that were the standout. Rémy Martin Cognac sales grew 11.1% in the first quarter from the comparable first quarter of 2017/2018, which grew 20% from the first quarter of 2016/2017.
Strong sales growth at the House of Rémy Martin mirror similar growth at Hennessy. Hennessy revenues grew 8% in the first half of 2018 on a volume increase of just 3%, reflecting a greater concentration of sales of higher prices cognacs.
Over 90% of Rémy Martin global cognac sales are derived from Grand Champagne Cognacs and an even higher percentage of revenues are attributable to their aged cognacs like Rémy Martin V.S.O.P., 1738 Accord Royal and X.O. Excellence. In contrast, Hennessy’s cognac sales are evenly divided among V.S., V.S.O.P and X.O. cognacs. The American market accounts for the bulk of the Hennessy V.S. sales and older cognacs are sold predominately in China and the rest of Asia.
RC noted that their “positive momentum in the first quarter was thanks to highly favorable trends persisting in Greater China and sustained growth in Singapore, Australia and Japan”. Rémy Martin is a producer of Fine and Grand Champagne Cognacs and generally does not compete at the V.S. designation, choosing instead to utilize its Petit and Grande Champagne eaux-de-vie to make longer-aged cognacs like 1738 Accord Royal, its V.S.O.P., XO Excellence and Louis XIII cognacs. Rémy Martin also produces the ultra-upscale cognac, Louis XIII.
The exceptional performance of Rémy Martin Cognacs was due to an increased focus on higher-end Cognacs and marketing those Cognacs in Asia. Rémy Martin’s high-end strategy is paying off as sales and profits are increasing. Cognac sales in China in recent years had fallen off as the country cracked down on conspicuous consumption. Rémy Cointreau has noted, however, that the situation appears to be changing as its Chinese sales picked up sharply in the second half of last year and continues through mid-2018.
Marketing Initiatives Drive Rémy Martin sales
RC noted that in fiscal 2018 Rémy Martin sales benefited from the introduction of two new Louis XIII boutiques – one at Harrods in London and the other at Xian in China.
Rémy Cointreau confirmed its forward guidance of the rest of the year based on the strong first quarter performance. RC noted after the release of the 2017 first quarter financial results that “the first quarter does not traditionally make a significant contribution to annual sales.” RC’s first quarter performance the past two years, however, appears to have broken that tradition.