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Tax increases in Belgium have altered the country's drinking habits and shrunk Remy Cointreau's sales in the country by a third over the past two years, the company's CEO has said.
Valérie Chapoulaud-Floquet said Remy Cointreau is trying to hang on to its Belgian market share
Speaking after the release of H1 profit results this week, Valérie Chapoulaud-Floquet said excise levies introduced in 2015 have "led to a complete collapse of the spirits market". She said the market contracted by at least 33%, Meanwhile, expectations that sales in neighbouring countries such as the Netherlands and Germany would pick up some of the lost revenues did not materialise.
"Initially we thought that consumption will remain fairly stable, but in actual fact what we witnessed was a total disaster," Chapoulaud-Floquet said. "What usually happens when you have that sort of situation, you see that there is a spillover in adjacent countries... but it didn't happen that way, because in actual fact, it's really consumption patterns that have changed."
The Belgium government raised excise taxes on spirits by 41% in 2015, far ahead of increases on beer (+17%) but behind levies on wine (+59%). According to figures from SpiritsEurope, by September 2016, there was a 16% decrease in sales in the retail sector, a 50% decrease in the on-premise and a 33% decrease in sales by producers. In a June 2018 report, Euromonitor said 2017 sales for alcoholic drinks fell and that total volume sales of alcoholic drinks will continue to decline.
Chapoulaud-Floquet said this week that Remy is trying to hold on to its market share in Belgium. "But the situation is extraordinarily complex and it's a fact for everybody in the industry."
Remy Cointreau released its H1 results on Thursday, with operating profits up 10% on an organic basis.
Analysts at Bernstein praised the results announcement, which follows Remy's announcement of an 8% organic H1 sales increase in October. According to Bernstein, Remy delivered "best-in-class top- and bottom-line growth".
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Companies: Remy Cointreau
