Update - FRANCE: Remy Cointreau to focus on Cognac, spirits
- Champagne "not profitable enough"
- Seeks to invest sale proceeds in Cognac
- Diageo out, Pernod Ricard, Bacardi in?
Remy Cointreau puts Piper-Heidsieck on the block
Remy Cointreau has said that its Champagne arm is unprofitable and the group hopes to reinvest proceeds from selling the business into Cognac and other spirits.
A spokesperson for Remy Cointreau told just-drinks today (16 November) that the French drinks group has reviewed its profit targets and that its Champagne business does not make the grade. Remy said yesterday that it has hired Credit Agricole bank to set up a bidding process for Piper-Heidsieck and Charles Heidsieck Champagne brands and related assets.
"This is part of our value strategy for the group," said Remy's Paris-based spokesperson. "Champagne is not profitable enough," she said, adding: "We want to reinvest in our high-end brands in order to accelerate growth."
The French firm is particularly keen to invest more behind the Remy Martin Cognac brand in Asia. China became the firm's largest market in net sales terms during its most recent fiscal year and premium Remy Martin Cognac has continued to perform well there in recent months.
The group also sells Passoa, Mount Gay rum and Cointreau and wants to put more resources into its spirits & liqueurs division.
Remy's Champagne arm swung to operating losses of EUR4m (US$5.4m) in the year to the end of March 2010, versus profits of EUR14m a year earlier. The firm's Cognac division, meanwhile, increased operating profits by 38% for the year, to EUR106m.
Analysts believe that the Champagne business could fetch around EUR200m, although the price will inevitably depend upon the auction process. In 2004, Remy muted the idea of selling its Champagne arm, but it held on to the business after receiving what were thought to be below-par offers.
A wide number of companies, from the drinks sector and private equity, could be interested in the business. However, just-drinks understands that Diageo, which already holds a minority stake in Moet Hennessy, has ruled itself out of the bidding. Bacardi is considered a possible suitor, as is Pernod Ricard, although the latter is focused on reducing debt.
Remy's spokesperson told just-drinks that there is "no timetable" for the auction process.
For just-drinks comment on this story, click here.
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