Rémy is to lose its Edrington distribution deal in the US next year

Rémy is to lose its Edrington distribution deal in the US next year

Rémy Cointreau could shed around EUR1.5m (US$2m) in profits after losing the US distribution rights for the Edrington Group's portfolio, according to an anaylst. 

The Paris-based group announced on Tuesday it will no longer distribute Edrington brands through its US network from next March. A Rémy spokesperson told just-drinks Edrington's decision to end the 28-year agreement was “fair”.

However, Nomura analyst Ian Shackleton said in a note yesterday (12 June) that despite increased sales of Bruichladdich Scotch and lower SG&A costs from the termination, “we would still see some negative profit impact here”. 

Shackleton estimated the profits loss at EUR1.5m, adding that Rémy expects the sales impact will be EUR90m.

Meanwhile, Bruichladdich is in line to help boost Rémy's Liqueurs & Spirits category over the next fiscal year, Shackleton said. The category suffered squeezed margins in Tuesday's full-year results partly due to the loss of EU subsidies for the St Rémy brandy brand.

However, Shackleton said “more meaningful contributions” from Bruichladdich, as well as Mount Gay rum, should help Rémy recover Liqueurs & Spirits' 5.5 percentage points margin drop in FY13.

Remy paid GBP58m (US$90.3m) for Bruichladdich in September and has since doubled annual output.