French drinks group Rémy Cointreau saw sales fall 16.4% during the first half of its fiscal year due to the impact of the Covid-19 pandemic on duty free and on-trade sales.
The Rémy Cointreau Group posted total sales of €430.8 million (US$508m) for the six-month period between April and September 2020, down by 16.4% on an organic basis compared with the same period in 2019.
After reporting declines of 33.2% in the first quarter, the second quarter was said to show “significant sequential improvement” but declined by 4.0%.
The group’s Cognac sales declined 18.1% in the first half of the fiscal year to €305.4m (US$360m). In Q1, sales dropped by 39.2% but performances in the US and “recovery seen in mainland China” meant that sales improved in the second quarter, dropping 2.5%.
Overall performance for the category was impacted by the “very low level of duty free sales” and the slow reopening of the on-trade in markets across Southeast Asia, Africa and South America.
The Cognac division of Rémy Cointreau now includes House of Brillet, following its acquisition in April 2020.
The company’s liqueurs and spirits business declined by 13.6% during H1 to €112.2m (US$132m) as a result of on-trade closures because of the Covid-19 pandemic.
Cointreau showed “modest declines” for the period, thanks to the US, UK, Germany, Belgium and Australia. The group’s Metaxa, St-Rémy, The Botanist and Mount Gay brands, as well as its whisky portfolio, all declined due to a fall in tourism, on-trade and duty free sales.
All major regions posted declines during the six months to September 2020. The Americas, which was down 0.7% in H1, reported a return to growth in the second quarter.
Asia Pacific posted declines of 27.4% during the period due to the “weakness of duty-free sales and the Southeast Asia market”. Europe, Middle East and Africa posted declines of 31.6% for the six-month period, despite a “strong performance” in the UK.
Sales for Rémy Cointreau’s partner brands grew by 2.1% thanks to a “noticeable” recovery in the Benelux region in the second quarter.
Looking ahead to H2, the group said it “remains confident of its ability to emerge stronger from the crisis”.
Rémy Cointreau now expects current operating profit to be down 25%-30% on an organic basis in H1, compared to previous expectations of a 35%-40% decline.
The group also said that the second half of its 2020/21 fiscal year should continue to benefit from strong recovery in the US and mainland China.
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Author: Owen Bellwood