Remy US Sales Drop as People Spend Less on Cognac
Remy’s sales in the US continue to decline as consumers cut back on purchasing cognac. Changing spending habits are affecting the brand’s performance.
Remy Cointreau SA, the French maker of Cognac, expects a significant drop in its sales, predicting a fall of nearly 18% for the full year. This is due to two main reasons: US consumers spending less on expensive spirits and the ongoing economic downturn in China. Remy had originally forecasted a 15% drop, but now expects it to be higher.
The company’s warning came just after luxury goods giant LVMH reported an 11.6% decline in sales in its wines and spirits division. This indicates that the demand for high-end alcoholic drinks is still weak. However, LVMH also noted signs of improvement, suggesting that demand could return to normal in the next two years.
As a result of the weak sales forecast, Remy’s shares dropped by 4.1% in early trading in Paris, with the stock losing nearly 39% of its value over the past year.
Despite these challenges, Remy has chosen not to lower its prices to boost sales, unlike some of its competitors. Instead, the company is focusing on cutting costs to protect its profits. It has introduced a new cost-saving plan worth €50 million, following a similar cost-cutting measure of €50 million announced earlier in the year.
In its most recent fiscal quarter, Remy’s sales fell 21.5%, which was worse than last year, partly due to rising living costs affecting Cognac sales. The company has also faced difficulties because of tariffs imposed by China, which are aimed at limiting brandy imports from the European Union.
However, the drop in sales was less than analysts had feared, and Remy reported that stock levels in the US had improved compared to earlier in the year. In Europe, the Middle East, and Africa, Cognac sales showed signs of recovery, especially in the UK.
In China and the Asia-Pacific region, online sales grew by over 10%, driven by big shopping events like Singles’ Day and Super Brand Day. Even though the future remains uncertain, analysts are hopeful that the trends will improve, with a possible recovery expected by the end of the year.
