Asia drives Remy sales

Related tags Economics

French drinks group Rémy Cointreau has reported double-digit growth
in the first quarter of 2004, driven by strong gains in Asia and
the US, but continued weakness in its domestic market took a toll
on Champagne sales.

Rémy Cointreau, which makes Cognac, liqueurs, Champagne and vodka, among others, said that organic growth for the first three months of the year had reached 11.8 per cent, taking sales to €178.9 million.

The rebound in Asia, where the previous year's sales were hit by the SARS outbreak, saw Rémy Martin Cognac sales leap 28.6 per cent on a like-for-like basis to €60.3 million.

In many Asian markets, fine brandies are seen as a sign of affluence and prosperity and sales of such products have historically risen during times of increasing business or economic prosperity. The fact that many of the countries where the spirit is traditionally drunk - China and Thailand, for example - are currently booming suggests that after a number of years of economic pessimism the tables are now starting to turn.

By the end of the 90s Asia was drinking around half of the total world production of cognac. However when the economic crash occured in 1998, sales of luxury items, and in particular brandy, slowed dramatically. However, with sure signs of recovery sales have bounced back rapidly in the last 18 months. This rebound has been headed by China, which reported a jump in cognac imports that topped 600 per cent in 2003.

Rémy Cointreau said that its strong performance had also been boosted by the recovery from last years SARS outbreak in Asia.

However, the company said that overall sluggish European economies held back growth in the liqueur market, with like-for-like sales rising just 1.3 per cent to €35.8 million.

The performance would have been worse if not for a strong showing from Cointreau in the US and Japan.

In the spirits division, strong organic growth of 14.6 per cent (to €40.1 million) was due in particular to vodka sales in Poland, where the Bols brand confirmed its recovery with another excellent quarter. The Mount Gay rum brand also performed well during the three-month period.

Europe also took its toll on the Champagne division, with the weak French economy in particular meaning that a number of minor brands were scrapped, resulting in a 10.4 per cent drop in like-for-like sales to €18.9 million. There was, however, a solid performance from the Piper-Heidsieck brand, boosted by new product launches such as Rosé Sauvage, Sublime and Rare, particularly in the UK.

Rémy welcomed the results - Champagne's decline notwithstanding - saying that they were in line with its expectations and reflected its goals for the year as a whole - to improve the product mix and increase volumes. "High marketing investment and the launch of innovative products should enable Rémy Cointreau to achieve its organic growth objectives for 2004/05,"​ the company said in a statement.

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