Might there be signs of better times ahead at Rémy Cointreau? The market seems to think so. Last week, the Rémy Martin Cognac and Bruichladdich whisky maker booked a 35% drop in annual profits but investors, with an eye on what might lie ahead, signalled their support for the French spirits group’s three-year strategy to drive sales and earnings.
In April, CEO Franck Marilly had launched a “transformation plan” dubbed RC Forward, a bid, he said, “to generate our own value creation and thus become less dependent on macroeconomic cycles”. On Thursday (4 June), Marilly provided more detail, providing a target for how much the company is aiming to boost its underlying profits and outlining a series of projects it has drawn up to grow sales.
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By the close of trading on Thursday, Rémy Cointreau’s shares were up 9%. Among analysts, however, one could detect a note of caution. The strategy, it’s argued, looks sensible but can the company produce the goods? “The direction is sound,” Barclays analyst Laurence Whyatt says, “but delivery and execution remain key from here.”
Rémy Cointreau, home to brands including Cointreau liqueur and The Botanist gin, has had a challenging couple of years, with sales and earnings under pressure amid muted demand in the key spirits markets of the US and China. Cognac has been among the spirits categories most affected by weaker consumer confidence and Rémy Cointreau, with a clear of majority of its sales and profits derived from the French spirit, has suffered.
Marilly, who was appointed last June, wants the company’s financial performance to be less reliant on swings in the macro economy and consumer demand. “The turnaround happens when a company takes back control,” Marilly told analysts on Thursday. “Taking control for me is very meaningful. We need to de-correlate ourselves from the negative markets. It is about clear strategic focus.”
Rémy Cointreau, he said, is aiming to improve its underlying operating profits by €100m ($115.2m) over the next three financial years.
The company has identified “three large battles to win”. One takes in projects largely in Cognac, as well as moves to “scale up” in emerging markets and “accelerate” sales in travel retail. A second is changing its approach on sales, including a review of A&P to focus spending on “fewer brands and regions”, Marilly said. And the third is making procurement more centralised.
Improving Rémy Cointreau’s performance in the US and China, the two largest markets for Cognac by value and volume, will be critical.
Among the company’s plans in the US is a “Cognac innovation launch” in the first quarter of its 2027/28 financial year. Details are under wraps – “it’s too early for me to say,” Marilly said – but the Rémy Cointreau did reveal the product is “a more affordable” Cognac “aimed at recruiting new consumers and creating new occasions”.
Bernstein analyst Trevor Stirling assumes the company is set to resume selling a VS Cognac in the US “after withdrawing from this segment several years ago when the category was on fire and eau-de-vie was scarce”.
He adds: “From a Rémy Martin portfolio view this makes sense but the two large incumbent VS Cognacs – Hennessy and Courvoisier – are unlikely to give up ground easily.”
Another project will take in China, a more premium Cognac market than the US, where, from the second half of the 2027/28 fiscal year, the company plans to “unlock the full potential” of Rémy Martin XO, Marilly said.
Those efforts will not be limited to China but more than half the revenue Rémy Cointreau generated in Cognac in the year to the end of March was derived from Asia Pacific and the country is the principal market in that region.
Speaking to analysts on Thursday, Marilly said Rémy Cointreau is “significantly outperforming” the market in China with Rémy Martin gaining share but the company is clear about the challenge of doing business there.
Deputy CEO and CFO Luca Marotta expects its sales and depletions to rise in China in its new financial year but “more in volume, less in value”. He added: “The market is pretty tough and very promotional. We are very humbly gaining market share.”
The second half of 2027/28 will also see Rémy Cointreau look to “capture the full potential” of its Prestige division, which houses Louis XIII Cognac and Champagne Telmont.
Rémy Cointreau’s efforts in emerging markets appear centred on Cognac – the slide in Thursday’s presentation highlighted Rémy Martin – but products like Bruichladdich and Cointreau also look set for support in travel retail. Both areas, Marilly said, “represent important growth platforms for the future that we expect to double by 2028/2029”. It’s important to remember, however, how fledgling Rémy Cointreau’s business is in emerging markets.
On sales, Marilly wants to make “a full reassessment” of how the company sells in the US, make “targeted” changes in Europe and “better capture white-space opportunities” in China.
Part of those efforts in China will be to try to grow Rémy Cointreau’s sales outside the key market of Guangdong Province. “We have to expand our territories, first of all, beyond Guangdong,” Marilly said.
In his note to clients on Friday, Stirling remarked: “We note the entire industry has been trying to do this for over a decade with limited success.”
The Rémy Cointreau CEO, meanwhile, said the company’s “third battle is procurement efficiency through greater centralisation”. The company, he added, is aiming to “unlock synergies across markets and brands”, pointing to areas such as media buying, as well as “packaging re-specification and supplier negotiations”.
Summing up the plans, he added: “All of this will be supported by clearer and more agile organisation, notably through a clarification of our marketing operating model and a simplification of internal processes within support functions to ensure greater commercial focus and faster decision-making.”
On paper, much of Marilly’s plans appear logical and board chair Marie-Amélie de Leusse sought to underline how the strategy is “more than a cost-cutting plan”.
She said: “By generating additional resources through efficiencies across everything we do, it will allow us to reinvest behind our brands and growth opportunities while building a company that is less cyclical, more agile and more resilient.”
Analysts, however, are keen to hear more about how the different parts of the RC Forward strategy will contribute to hitting Rémy Cointreau’s operating-profit target. “While the presentation highlighted the group’s ambition, it provided little colour on the relative weight of drivers of growth,” Stirling says.
Perhaps a more fundamental question is whether Rémy Cointreau can deliver on all of its plans. That the company wants to try to broaden its revenue base and be less centred on Cognac (and, within Cognac, on the US and China) is laudable. However, can that be achieved while, at the same time, trying to build on the recent green shoots it has seen from its Cognac business in those two markets?
“Each of the initiatives mentioned in the slides makes sense but we worry that this is potentially a very full and demanding agenda for what is a relatively small organisation,” Stirling says.
For now, there is an expectation among analysts covering Rémy Cointreau that the company will grow its organic sales at a faster rate in its new financial year (the consensus forecast is for a 3.2% rise), which would be a solid outcome after the travails of recent years.
Looking further ahead, the question is whether the blueprint Marilly and his colleagues have drawn up will pay off.
