Latest news with #RemyCointreau
CNBC
07-06-2025
- Business
- CNBC
Spirit makers face a sobering cocktail of challenges — from tariffs to teetotalers
Global spirit makers are staring down a sobering cocktail of challenges as tariffs and brand boycotts threaten to exacerbate wider shifts in drinking habits. French cognac maker Rémy Cointreau on Wednesday became the latest spirits maker, following Diageo and Pernod Ricard, to withdraw its sales targets on increased economic and trade uncertainty. "Given the continued lack of macroeconomic visibility, the geopolitical uncertainties surrounding U.S.-China tariff policies, and the absence to date of a recovery in the U.S. market ... the conditions required to maintain [Remy Cointreau's] 2029-2030 targets are no longer in place," it said in a statement. The move came as full-year sales at the group's cognac business, which includes its namesake Remy Martin brand, fell 22% on an organic basis on slowing U.S. consumption and "complex market conditions" in China. The popular brandy variety, which hails from the French region of Cognac, has been particularly caught in the crosshairs of ongoing U.S.-Sino tensions. LVMH similarly saw a 17% drop in its Hennessy cognac in the first quarter. But the specialty drink is far from alone as trade barriers weaken already drying demand for spirits. LVMH's wine and spirits remains the French luxury group's worst performing division, while Diageo spirits including Tanqueray, Gordon's and Smirnoff saw the steepest declines in the first quarter as sales of Irish stout Guinness rallied ahead. "Distilled spirits in the U.S. are going through a correction, and U.S. tariffs add another layer of uncertainty," Jefferies said in a note last month. The prestige — and often legal requirements — associated with spirits and wines mean that they are heavily dependent on local production and thus heavily exposed to U.S. import levies. Champagne must be produced and bottled within the Champagne region, for instance. "With spirits and wines you have terroir caches, and that means you're producing locally and exporting. Hence it's much more vulnerable to geopolitical tensions," Sanjeet Aujla, analyst at UBS, told CNBC via video call. Remy Cointreau estimated that tariffs as they currently stand could serve a 65-million-euro blow ($55 million) to its business after mitigating measures. Diageo, meanwhile, said about 25% of its business is set to be impacted by duties. The same does not apply for beer, which relies on local production and has been flagged as an unlikely winner from brewing trade divisions. Notably, the world's largest brewer AB InBev, as well as Dutch and Danish beermakers Heineken and Carlsberg all maintained their full-year guidance in the first quarter. As a result, wines and spirits are potentially more exposed to brand boycotts too, with consumers more likely to swap out a particular product on political grounds in favor of a locally-made alternative. The tariff hit comes as the industry has slowed over recent years following a strong decade of growth, particularly during the Covid-19 pandemic. Locked-down consumers forked out more on alcohol in 2020 and 2021, fueling a simultaneous surge in premium brands. "During the pandemic, not only did people drink more, they premiumized more," Aujla said. Spirits are often seen as an affordable luxury, especially in good economic times. But they nevertheless tend to be an occasional purchase, with many Covid-era stockpiles remaining in liquor cabinets across the world. As economic conditions turn, however, consumers may be less inclined to cough up $100 for a good bottle, instead downtrading or opting for lower-cost ready-to-drink (RTD) alternatives. "Spirits-based RTDs are weighing on distilled spirits growth alongside the impact of cumulative inflation," the Jefferies note said, adding that downtrading was most visible in vodka and rum products, while demand for premium whisky, tequila and gin remained more robust. "That [premiumization] is on pause today, given the cyclical headwinds we have in the industry," Aujla added. The drying demand comes as health and wellness trends spark a shift in consumer habits, with more people becoming "sober curious" and experimenting with lower alcohol consumption. Indeed, many drinks makers have sought to embrace that shift with new ranges of low and no alcohol products. Meanwhile, the proliferation of weight loss drugs — and early evidence of their role in suppressing alcohol cravings — pose another potential challenge for the industry. Nevertheless, analysts remain divided over the severity and permanence of the downturn. "There is considerable debate over the extent to which currently anemic demand is cyclical or structural," James Edwardes Jones, analyst at RBC Capital Markets, said in emailed comments. Cyclical pressures refer to economic headwinds and hangover supplies from the Covid-era, while structural shifts refer to changing consumer patterns. "It's a bit of both, and more cyclical than structural," Aujla said. "But when the cyclical headwinds dissipate, we think US Spirits industry growth will be 1-2% lower than the 4-5% historical growth."
Yahoo
05-06-2025
- Business
- Yahoo
Remy Cointreau (REMYF) Full Year 2025 Earnings Call Highlights: Navigating Challenges with ...
Revenue: EUR984.6 million, representing an 18% organic decline. Current Operating Profit (COP): EUR217 million, down 13.5% organically. Organic COP Margin: 21.6%, a deterioration of 3.9 points organically. Gross Margin: 70.6%, declined by 1 point due to cost production inflation and negative price/mix effect. A&P Expenses: Reduced by 1.1 points, now 20.3% of sales. Cost Savings: EUR85 million in '24/'25, totaling EUR230 million over two years. Net Financial Debt: EUR675.4 million, up EUR25.7 million from March '24. Net Profit Group Share: EUR121.2 million, net margin of 12.3%. Earnings Per Share (EPS): EUR2.36, down 35.3% year-on-year. Free Cash Flow: EUR19.2 million in '24/'25. Dividend Proposal: EUR1.5 per share, with EUR1 in cash and EUR0.5 in cash or shares. ROCE: 10.3%, down 5.2 points on a reported basis. Warning! GuruFocus has detected 7 Warning Signs with REMYF. Release Date: June 04, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Remy Cointreau (REMYF) maintained a strong gross margin of 70.6% despite challenging macroeconomic conditions. The company achieved significant cost savings, totaling EUR230 million over two years, with a focus on structural savings. Cointreau gained market share by leveraging the growth of cocktails, particularly in the US, and is exploring new consumption occasions. The Botanist brand has become accretive for the group, benefiting from the portfolio strategy beyond Cognac. Remy Cointreau (REMYF) made substantial progress in sustainability, achieving a 12% reduction in carbon emissions and a 53% reduction in net water consumption. Group sales declined by 18% organically, reflecting broader macroeconomic challenges. The US market remains challenging, with no clear signs of a rebound in sell-out trends. Potential tariff increases in China and the US could have a significant negative impact on financial performance. The company withdrew its '29/'30 objectives due to persistent macroeconomic uncertainties and tariff risks. The Cognac category, particularly in the US, faces challenges in recruiting new consumers beyond its existing core clientele. Q: In the US, are depletion trends close to flat, and how does this relate to sell-out trends for Remy Cointreau and the Cognac category? A: Eric Vallat, CEO, explained that depletions are close to flat but still slightly negative, showing sequential improvement. Actions on pricing, particularly for VSOP, have had a positive impact, though not fully implemented. It's too early to confirm if sell-out is back to growth, but stock levels are healthy, and the company is confident in sell-in recovery. The challenges are seen as cyclical, with a focus on recruiting beyond the existing clientele. Q: What are the sensitivities around potential tariffs on EU imports, and how much of the impact can be mitigated? A: Luca Marotta, CFO, stated that theoretically, a 20% gross impact from tariffs is possible, but the actual impact will depend on various factors, including phasing and volumes. The company aims to mitigate the net impact through strategic actions, projecting to offset more than 35% of the total effects, potentially reaching EUR50-60 million in savings. Q: What is needed to drive a spark in the Cognac category in the US, and how does pricing play a role? A: Eric Vallat, CEO, believes the issue is not solely price-related, as depletions are negative across the board except for tequila and cocktails. Psychological pricing is important, but the main challenge is recruiting beyond the existing clientele. The company plans to invest in communication and activations to rebuild desirability and expand its consumer base. Q: Can you provide insights into the long-term outlook for top-line growth and cash flow, considering the withdrawal of midterm targets? A: Eric Vallat, CEO, emphasized that the withdrawal of targets is due to tariff uncertainties rather than top-line potential. He believes there is significant growth potential in China and the US, with a focus on expanding geographical footprint and non-Cognac brands. Luca Marotta, CFO, added that strategic ODV investments and CapEx are being optimized, with a focus on maintaining a strong cash flow position. Q: How are stock levels across different regions, and what is the focus of marketing spend? A: Eric Vallat, CEO, reported that stock levels are healthy worldwide, with four months in the US and stable in China and Europe. Marketing spend is prioritized based on brand and market potential, with a focus on digital and below-the-line activities. The company aims to maintain a 20% A&P ratio, with adjustments based on market dynamics and brand needs. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Sign in to access your portfolio
The Herald Scotland
05-06-2025
- Business
- The Herald Scotland
Owner of Scotch whisky giant Bruichladdich scraps target
However, shares in the Paris-listed closed up more than 5%, after Remy signalled the 'excellent execution' of cost-cutting plans, with €85 million achieved compared with €50m expected. Remy said it has now saved €230m over the last two years. The savings partially offset a sharp decline in sales at the company, which fell by 4.8% last year to €984.6m. Operating profit tumbled by 30.5% to €217m. The decision to withdraw a long-term growth target set in 2020 underlines the continuing turbulence in the global spirits market that has arisen from a slowdown in major markets such as the US and China and the ongoing uncertainty sparked by President Donald Trump's trade tariffs. That took a further turn this week when the President doubled US tariffs on foreign aluminium and steel to 50%, although the UK has so far secured an exemption. Remy Cointreau, which is perhaps best known for its Cognac and brandy, is the latest big-name Scotch whisky distiller to highlight the impact of tariffs on business, following Diageo and Pernod Ricard. Diageo reported last month that US tariffs may hit profits by up to $150m per year, having withdrawn its guidance earlier in the year amid tariff uncertainty, although that was before it was ruled by the US Court of International Trade that the Trump administration did not have the authority to impose sweeping tariffs on other countries. The ruling, which covered the 10% global baseline tariff and the 50% tariff threatened against the European Union, has been appealed. Remy Cointreau said yesterday: 'Given the continued lack of macroeconomic visibility, the geopolitical uncertainties surrounding US-China tariff policies, and the absence to date of a recovery in the US market based on improving underlying trends… Remy Cointreau believes the conditions requited to maintain its 2029-2030 targets are no longer in place. 'As a result, the group has opted to withdraw its objectives for 2029/30 originally issued in June 2020. 'This decision also reflects the arrival of a new chief executive officer, who will establish his own strategic roadmap while remaining aligned with the value strategy implemented by the group for decades.' The removal of the long-term target was announced as Remy, which has appointed Franck Marilly as its new chief executive, replacing Eric Vallat, reported that sales and profits tumbled in its 2024/2025 financial year. However, it expects to return to growth in the current year. Excluding any increase in customs duties in China and the US, it expects operating profit to increase in the high single-digit to low double-digit [percentage] range. The company estimates that potential increases in duties will have a maximum gross impact of €100m on operating profit (€60m in China and €40m in the US) but said it could offset this by 35% through its own action plan, reducing the maximum net impact to €65m. These estimates are based on additional anti-dumping duties of 38.1% on Cognac imports arriving in China, and custom duties of 20% on imports from the EU and 10% from the UK and Barbados on goods entering the US. Remy said it factored in 10% custom duties on all imports to the US for the April-June 2025, corresponding to the 90-day grace period. Shares in Remy Cointreau, which trade on the Paris stock market, were trading up 4% at €48.8 around 5.30pm last night.
Daily Mail
04-06-2025
- Business
- Daily Mail
French brandy and liqueur-maker Remy Cointreau axes sales targets as Trump tariffs bite
The maker of Remy Martin cognac and Cointreau liqueur has become the latest global drinks company to abandon its sales targets in the face of the trade war declared by US president Donald Trump. Paris-listed Remy Cointreau, which has teamed up with The White Lotus actress Aubrey Plaza to promote one of its brands, said that the 2030 goals that it had set out in 2020 were no longer realistic. It blamed tariffs as well as persistently slow US sales. However, the company's shares climbed 4 per cent as it said the worst has passed in terms of sluggish sales. 'We believe this difficult phase is now behind us,' said chief executive Eric Vallat. Its rivals, including Diageo and Pernod Ricard, have also withdrawn their sales targets as the sector endures a sharp slowdown from previous boom years for pricey liquors. But Remy, which makes 70 per cent of its sales from cognac, mostly in the US and China, has suffered more than peers as drinkers in both nations ditch the brandy and both governments have levied tariffs.
Fashion Network
04-06-2025
- Business
- Fashion Network
Remy Cointreau withdraws its mid-term goals and posts lower annual profits
French spirits group Remy Cointreau reported a smaller-than-expected 30.5% drop in annual organic operating profit, withdrew its mid-term goals, and said sales would return to mid-to-single-digit growth during the next financial year. The maker of Remy Martin cognac and Cointreau liqueur said on Wednesday that the lower profits reflected weak sales in its key markets of China and the United States, where the group also faces tariff threats. Remy Cointreau, which last week named luxury goods veteran Franck Marilly as its new chief executive, said it had decided to withdraw its objectives for 2029–30, citing continued uncertainty around tariffs. Its group operating profit fell 30.5% on an organic basis to 217 million euros ($246.7 million) for the full year ended March 31, 2025. This compares with analysts' expectations of a 31.7% fall in a company-compiled consensus of 15 analysts. ($1 = 0.8796 euros)
