Spirits group Rémy Cointreau has announced that it plans to 'terminate' its distribution contracts for its Partner Brands in the Czech Republic, Slovakia and the US, after the decline in this division led to the group posting a drop in sales in the first half.
Rémy Cointreau posted a 0.6% decline in reported sales (and a 3.6% decline) in organic sales for the period, after the Partner Brands division saw a 7.14% decline in sales, due to the 'termination of large distribution contracts', the group said in a statement.
Group Performance
Overall, Rémy Cointreau reported sales of €523.9 million in the six-month period, compared to €527 million the previous year.
Exiting distribution contracts for its Partner Brands will likely have a €56 million impact on sales and a €5 million impact on operating profits, the group said.
The performance of the group's Partner Brands notwithstanding, Rémy Cointreau put in a relatively strong performance, with its Group Brands seeing a 6.1% increase in sales, boosted by positive currency effects, or by 2.8% in organic terms.
Within the Group Brands division, the House of Rémy Martin posted a 2.1% increase in organic terms, however it suffered due to a fall in tourism in Hong Kong as well as 'slower than anticipated stock replenishment' in the US.
Its Liqueurs & Spirits division, meanwhile, posted organic growth of 4.9% in the first half, with Cointreau seeing an 'excellent first half', driven by both a strong US performance and 'more favourable trends' in its historic European markets.
Its Mount Gay and St-Rémy brands posted a 'strong start to the year', the company said, while gin brand The Botanist saw double digit growth, however its Metaxa brand declined over the period, mainly due to a change of distributors in Central Europe and Germany.
Geographical Strength
On a geographical basis, Rémy Cointreau's Group Brands saw 7.1% growth in Europe, Middle East and Africa, with the UK and Africa leading the way in this territory, while Asia Pacific was up 1.4% and Americas was up 1.8%.
'After disruption at the beginning of year due to changes in the distribution network in Europe, sales benefited from a general recovery in the second quarter and remarkable growth for Cointreau in the United States in particular,' it said.
In terms of the coming year, aside from the exiting of the Partner Brands contracts, the group 'anticipates that 2019/20 will unfold within the framework of the group’s medium-term objectives'.
© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.
