Comment - The Beauty of a Fresh Start for Remy Cointreau
Bruichladdich will have a bigger role to play in Remy's future
As a former L'Oreal executive, Valérie Chapoulaud-Floquet will be no stranger to makeovers. But the one she unveiled for Remy Cointreau this week - nine months into her new role as Remy CEO - is more than just skin deep.
Put simply, Chapoulaud-Floquet wants to morph Remy from an alcohol company into a luxury retailer that happens to sell alcohol, alongside the likes of Louis Vuitton (who she also previously worked for) and Rolls Royce.
This naturally means more expensive products. But Chapoulaud-Floquet does not want to raise prices. Instead, Remy will shift its focus to what it is now calling "exceptional spirits", or, more accurately, products over US$50.
In a meeting with analysts in London this morning, Chapoulaud-Floquet laid out the bones of how she intends to do this.
About two-thirds of "activity" will shift to those $50-plus products compared to 45% currently. Innovations will also play a large part, as will smaller brands such as those from Scotch unit Bruichladdich and rum producer Mount Gay. The ultra-premium Louis XIII Cognac brand, which sells for about $3,000, will be rolled out to markets outside of its Asian strongholds, as demand there weakens.
More brand ambassadors will be employed as Remy tries to make itself more "consumer-centric" and in step with the market. Fixed costs will also be cut and the organisation made "more agile and responsive" – terms which are often shorthand for job losses.
These are pertinent ambitions for a company that has had a rough time of it of late. Full-year results released yesterday showed strong profits growth and even marginal organic sales growth. But Remy was hard hit by anti-extravagance measures in China and because of its over-exposure to Asia, it is now contemplating its changes from a position of relative weakness.
Those seismic shocks in China appear to have left an impression on Remy. Chapoulaud-Floquet said today that the US looms larger in the company's future than any other market. "China is not as important as the US," she explained. "(The US) is where we will make our money."
So what chance does Chapoulaud-Floquet's makeover have?
The CEO made it clear that her vision is no short-term goal, but will take a few years to align. But her hand is being forced by other factors in the spirits world. The decision to move up the value chain clearly makes sense as that is where the fastest growth is. But Remy is not the only company to realise this - and is certainly not the first.
For the past few years, Pernod Ricard has been repositioning its Martell Noblige Cognac to appeal to younger, more modern consumers: mainly 30-40-year-old Asians with spending-power potential. Much has been done to get these people on the bottom rung of the Cognac ladder before they are lost to other spirit categories and Pernod has rolled out a number of limited editions.
Meanwhile, Diageo is leveraging its celebrity endorsements - P Diddy in Tequila and David Beckham in Scotch - to target the same kind of consumer in Western markets.
It looks as if the above-$50 spirits category will be a crowded place over the next few years and that means prices are likely to rise. Chapoulaud-Floquet even suggested $50 may become the benchmark for VSOP.
Let's hope the new CEO's deep-cleanse results in a rosy hue – and doesn't leave a nasty rash.
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