‘UPDATE: As of the 27th January, a new COE for the houe has been appointed. Eric Vallet has a solid history in the luxury good market, including Louis Vuitton, Christian Dior and Bonpoint. He now takes on the challenge of the top cognac house, and will draw on his expertise in steering the brand towards further success in the future.’
Announced this morning (Thursday 23 January 2014) at Rémy Martin, the official line is that 45 year old, Piana, is leaving for a “new career”, with a statement from management that they “regret his departure.”
This news comes less than three weeks after the announcement of the resignation of Frederic Pflanz, CEO of the parent group, Remy Cointreau. This was only a few months after he took up the position, and the official line in this case is that he was leaving due to “personal reasons.”
Officially, Piana wants to give his professional life a new orientation, and Rémy states that they regret his exit. Rémy Cointreau is facing some problems that are market driven right now, especially linked to the downside of sales in volume and value to China.
It appears that there are currently different views on strategy in Remy Martin: internal discussions about the approach to shifting markets perhaps. This is big news, and no doubt there will be some kind of reaction in the markets.
Is there a link between the two sudden departures? Apparently Pflanz was pessimistic about the dynamics in the Chinese market. But you can be sure there will be some speculation in the press over the next few days.
Here’s an interesting 2012 quote from Just-Drinks Interview between Patrick Piana and Olly Wehring (worth reading by the way):
“Greater Asia – that’s not only China – accounts for 50% of our (Remy Martin’s) business, … So, yes, Asia is important. But, when you think of population growth around the world, it’s good news that we’re able to capture growth coming from emerging markets. It would be extremely sad if we couldn’t.” (July 2012)
Rémy Cointreau suffered a real downturn in its latest quarter, mainly thanks to China’s crackdown on corruption. The effect on spending for luxury goods seems to be really digging in now, especially for upscale & premium products, such as cognac.
The government led anti-corruption campaign in China has been in effect for about a year now, and has really pulled the plug on the long-standing Chinese tradition of giving luxury gifts – both in business and for personal reasons. Strangely, this change of policy seems to have hit Rémy Cointreau more than its rivals, such as Hennessy, Martell and Courvoisier.
Sales of Rémy Martin Cognac (contributing to a massive 70% of Remy Cointreau profits) fell 35% from the same time 12 months ago, to €138.7 million ($188 million) for the three months ending Dec. 31. Shipments to China were reduced as stocks in China begin to pile up. The consequence of all this is a 22% slide in the fiscal third-quarter.
However, Rémy is confident that growth will come back to the market 2014-2015. The current share value of Rémy Cointreau is up 1.05%, so it’ll be interesting to see how this plays out over the coming weeks. Analysts are shocked about the decline in sales, and the company expects operating profits to decline by around 20% to the year ending March 31.
Looking at rival Pernod Ricard, the situation seems to be better with cognac brand, Martell. The cognac house is promoting less upscale-premium products and focusing more on less expensive cognacs.
Right now, the whole company of Rémy Cointreau seems to be under the interim management of Chairman, François Hériard Dubreuil. Come on, Rémy Martin! You can do it. We have full faith in you to ride out this economic storm. After all, Rémy Martin has gigantic stocks of Fine Champagne eaux-de-vie. A massive asset and advantage analysts shouldn’t forget about.
As soon as more news comes in, we’ll make sure to keep you updated – so watch this space
Read more about Remy Martin Cognac.
Sources: Own Sources, Wall Street Journal, Charente Libre