Luxury thirst - Remy Martin Louis XIII Rare Cask

Luxury thirst - Remy Martin Louis XIII Rare Cask

China's strong demand for Cognac has fuelled a rebound in fortune for shares in Rémy Cointreau.

Rémy's share price has won new ground after initially slipping by almost 2% yesterday following the firm's announcement of lower-than-expected net profits for its fiscal year.

The French wine and spirits firm rose by 3.5% today (10 June), taking it almost EUR2 higher than where it began yesterday. Its share price is up 8% compared to this time last month.

China's strong thirst for Cognac, and optimism that favourable economic conditions will allow this to continue, appear to have driven the turnaround in fortunes.

"China, combined with a return to slight growth in the US should more than offset subdued demand in Europe," said independent analyst Veronnique Adam.

"Remy Martin is gaining share in cognac following the recruitment of 400 new sales people and marketing step up (+21% spending last year)," said ex-JPMorgan analyst Adam on her Pablofinance.com blog.

"According to management Remy Martin has become the second largest brand in value in China behind Hennessy, ahead of Martell," she added.

Asia Pacific accounts for more than a third of Rémy Cointreau annual sales and more than half of Rémy Martin sales.

The firm's Champagne division, which posted EUR4m operating losses for the year to the end of March, will continue to be difficult over the next 12 months. But, Cognac is expected to more than make up the difference.

For just-drinks' opinion on Rémy's results, click here.