Rémy Cointreau Brands

Rémy Cointreau Brands

Remy Cointreau is cutting around €50m in costs this year to help limit its profits slide as sales continue to plummet in the US and China.

Remy’s operating profit fell 17.6% to €147.3m for the first six months of the fiscal year, beating analysts’ expectations of a 20.6% decline.

The brand’s sales suffered a steep decline of 15.9% to €533.7m as demand remained sluggish in the US and China, its two key markets.

The US and China drive the majority of cognac sales which account for around 70% of Remy’s revenue.

The US recovery is expected to be “very slow”, said CEO Eric Vallat, while market conditions in China are worsening amid further ‘anti-dumping’ tariffs on cognac. For Remy Martin cognacs, this duty is 38.1%.

As a result, the premium spirits maker predicts organic sales will decline between 15% and 18% in the full-year, while operating profit margin will stand between 21% and 22% on an organic basis.

China’s commerce ministry has made a provisional decision to renew the additional duties from October 11. If confirmed, Remy said the impact would be “marginal” for the current year and the group would activate its action plan to mitigate the effects from next.

Remy Cointreau has already said mitigation actions will include price rises, while Hennessy has reportedly suspended a plan to bottle its brandy in China to avoid tariffs after hundreds of workers went on strike last week to protest the move.

Remy said 2024-25 be a “year of transition” before “a resumption of the trajectory set for 2029-30” as it aims to deliver high single digit annual growth and gradual organic improvements in operating margin.

Remy’s €50m cost savings over the full year is seeing big cuts to its marketing and communications budget, although this still remains above its 2020 spend, the company said. It is now looking to reintroduce some targeted marketing to the US and China in the second half of the year.

Morning update

Consumer confidence was unaffected by last month’s budget with many Brits still worried about the economy in the lead up to Christmas, according to the British Retail Consortium (BRC).

While there was a slight improvement in people’s view on their personal finances, their view worsened on the state of the economy for the next three months, a BRC-Opinium poll showed.

“The last month clearly did little to shift the dial for households either positively or negatively,” said Helen Dickinson, CEO of the BRC. “However, the same cannot be said for the retail industry. With over £7bn in additional costs in 2025 resulting from the budget, retailers will have little choice but to raise prices or reduce investment in jobs and shops.”