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China crackdown hits €2,500-a-bottle cognac

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The upmarket Louis XIII cognac

The upmarket Louis XIII cognac

The upmarket Louis XIII cognac

The new boss of Remy Cointreau said yesterday that affluent Chinese consumers remained a key market after problems in the country hit profits for the French spirits company.

A Chinese government crackdown on corporate gift-giving hurt demand for Remy Cointreau's premium cognac, contributing to a fall of almost 15pc in first-half operating profit.

However, the decline was not as bad as analysts had feared, partly due to a strong performance in the liqueurs division. Remy Cointreau said it still expected growth in full-year sales and operating profit despite a mixed economic outlook.

Analysts took the view that the glass was half full rather than half empty and Remy shares rose 2.2pc by lunchtime yesterday.

Remy Cointreau's focus has been on deluxe drinks like Louis XIII cognac, which sells for €2,500 a bottle. This has made it more vulnerable than its rivals to China's crackdown.

Remy is now organising private dinners to promote its products to wealthy Chinese drinkers with a taste for luxury but eager to stay out of the public eye.

Chapoulaud-Floquet said the group still needed a vodka brand and was also likely to look at French liqueur brand Grand Marnier, which is exploring a sale. Its other brands include Remy Martin cognac, Cointreau liqueur and Mount Gay Rum.

Operating profit for the six months to September 30 reached €102m, down 14.6pc like-for-like from a year ago but above analysts' expectations for €89m.

New chief executive Valerie Chapoulaud-Floquet, who has worked for L'Oreal and LVMH, said China remained important but it was not clear when it would revive.

Irish Independent