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Spirits group Remy confident over 2022/23 despite COVID restrictions in China

By Dominique Vidalon

PARIS (Reuters) -French spirits group Remy Cointreau said it looked at its 2022-2023 fiscal year with confidence, predicting a strong start to business in the first quarter despite a high comparison base and COVID-related restrictions in the key Chinese market.

For its 2021/2022 full fiscal year ended March 31, the maker of Remy Martin cognac and Cointreau liquor kept a forecast for “very strong” organic growth in operating profit as it reported a sales rise of 27.3%, in line with expectations.

Due to higher marketing and communication spending and a tougher comparison base in the second half, full-year profits will be driven solely by the first-half growth, the group reiterated.

“The group is today perfectly positioned to take advantage of new consumer trends. Its high-end positioning, the strong level of desirability of its brands and the rarity of its eaux-de-vie and aging spirits give it excellent pricing power,” the group said in a statement on Friday.

The pandemic has helped Remy’s drive towards higher-priced spirits to boost profit margins long-term, accelerating a shift towards premium drinks, at-home consumption, cocktails and e-commerce.

Group sales for the 12 months to March 31 came in at 1.313 billion euros ($1.38 billion), marking an organic rise of 27.3%, that was in line with a company-compiled consensus for 27.2% growth, thanks to strong demand for premium cognac in China, the United States and Europe.

Sales at the Remy Martin cognac division, which makes the bulk of group profit, rose 26.3% in the full year.

However, in the fourth quarter alone, cognac organic sales fell 16.7%, compared with expectations of a 15.9% decline.

This reflected a previously-flagged voluntary management by the group of its strategic inventory ahead of sharp April 1 price increases, as well as the impact COVID-related lockdown measures in China, said Remy.

The underlying trend remained robust in the United States and in Europe during the fourth quarter.

($1 = 0.9505 euros)

Source : Reuters

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