When it comes to newsworthy items, it seems that it’s a case of ‘it never rains, but it pours’ when talking about Rémy Martin and Rémy Cointreau at the moment.
There’s so much to talk about that it’s almost a challenge to know where to start. So let’s try to get it in some semblance of an order, so you know what’s going on with the drinks and cognac giant.
New Cellar Master for Rémy Martin
As we reported earlier in the year, Pierrette Trichet has stepped down from her position as cellar master, handing the reins over to the extremely capable Baptiste Loiseau. He officially took over the position in April 2014, and Cognac Expert were lucky enough to be invited to celebrate the event. You can read more about Baptiste’s inauguration here.
CEO of Rémy Martin quits his position
Patrick Piana, CEO of Rémy Martin Cognac, left his position in January 2014. This was only 20 days after Frederick Pflanz, CEO of parent group, Rémy Cointreau, also left his position.
Luxury goods expert, Eric Vallet, has taken over the position of CEO for Rémy Martin. His background includes prominent positions with companies such as Christian Dior, Bonpoint and Louis Vuitton. You can read more about the exit of Patrick Piana here.
New CEO for Remy Cointreau
As of Tuesday, 10 June 2014, Remy Cointreau has appointed luxury goods sector specialist, Valerie Chapoulaud-Floquet as their new CEO. She will take up the new position in September of this year.
Rémy Cointreau has been looking for a replacement CEO since the abrupt resignation of Frederick Pflanz in January 2014.
Chapoulaud-Floquet spent over two decades with the cosmetic firm, L’Oreal, before joining Louis Vuitton in 2008. She’s certainly going to have her work cut out, taking on the monumental task that’s hit all luxury item sectors thanks to the Chinese government’s crackdown on personal spending and gift-giving.
However, she certainly seems to have the track record necessary to do this. Chairman and interim CEO for Rémy Cointreau, said of the appointment of Chapoulaud-Floquet, “Her keen understanding of the brand, her knowledge of the luxury sector, and her well known temperament and charisma are all assets which will enable her to perform her role to the full.”
Profits fall due to slowdown in Chinese market
Thanks to the government crackdown on corruption in China, reducing spending by civil servants on luxury goods and gift-giving, the company has seen profits dive by over half.
Rémy Cointreau have said that to the year-end of March 2014, they’ve seen net profits fall 52 per cent to 62.4 million Euros ($84.89 million US dollars). Add to this the fact that the Chinese economy (the second largest in the world), is now growing at a slower rate than over the last few years, and you can see why it’s having such a massive impact on sales.
The sale of cognac in China is responsible for half of all cognac sales for company. And last month the company made the following announcement, saying it had been “adversely affected throughout the financial year by the Chinese government’s anti-extravagance policy, which had a negative impact on the consumption of premium spirits.”
However, it seems that there are some green shoots of recovery showing for Rémy. And on Thursday 12 June they announced that they are confident that the company will once again return to organic growth this year.
Rémy are not the only company to be hit by the Chinese crisis. Competitors Pernod Ricard and Diago have also suffered similar fates. It’s estimated that China now accounts for 45 per cent of revenue for the watchmaker Omega, 35 per cent for jeweller, Cartier and 25 per cent of leather and luggage group, Louis Vuitton.
Of course, with China being such a crucial proportion of the luxury goods market, the global giants are forward thinking in every way possible. And they’ll be glad to see some kind of recovery is looking imminent. Last month the management consultant, Bain and Company, said that they estimate the luxury goods market in China would grow by around 2-4 per cent this coming year. See also our detailed article Stocks slump as Chinese crackdown threatens Cognac industry.
Remy Cointreau downgraded to BB+
Another knock on effect of the lowered operation profit of the company has seen them being downgraded in the Fitch Credit Ratings from BBB- to BB+. However, the outlook for them is regarded as stable, as long as they reach the expectation that their leverage will improve in the financial year of 2015.
As you can see, it’s interesting times for Rémy right now. But it appears that the cognac and luxury goods giant is doing all it can to pull themselves through these troubled times. And naturally, we at Cognac Expert will keep you updated on any changes. So watch this space…
Read more about Remy Martin here.
Sources: reuters.com, online.wsj.com, bbc.co.uk