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CHINA: Cognac sees "temporary slowdown" - analyst

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Cognac sales growth in China is continuing to tail off and companies are expected to report a "temporary slowdown" in the last two quarters of this calendar year, according to analysts. 

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Since July, sales have slowed and consumption growth "seems to be moderating", analysts Kepler said in a note today (21 September). However this comes off the back of three years of "very strong" volume growth for the category in the country.

Kepler said the slowdown was likely the result of a "weaker macro, as well as less drinking/gifting, ahead of the October political elections". 

It said it expects the mid-autumn festival and China's Golden Week - a seven-day national holiday starting on 30 September - to be "key" for Cognac producers, but said sales could go either way during the break. 

"While we remain confident on Cognac's mid-term performance in China, we think calendar Q3 and Q4 publications could confirm a temporary slowdown," the note added.

Remy Cointreau and Pernod Ricard are "the most exposed companies" to China, Kepler said.


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