Remy Cointreau too concentrated in cognac, investors say
By Emma Rumney
LONDON, July 24 (Reuters) -Remy Cointreau RCOP.PA investors say the company needs to diversify further as its reliance on cognac sales in the United States and China leaves it among the worst-hit by a global spirits downturn.
The maker of Remy Martin cognac has already signalled it wants to grow sales in other markets and invest in its portfolio of other drinks, including Cointreau liqueur and The Botanist gin.
The company makes some 70% of sales from cognac, with the vast majority of those in the U.S. and Chinese markets. Its performance has been hurt by destocking in the United States. Meanwhile, China's recovery from the pandemic has also been slower than hoped.
Three Remy investors told Reuters it had become increasingly important for the company to diversify its business from cognac to cushion the blow when its major markets falter.
"The risk is that they are just so exposed to cognac," said Fred Mahon, fund manager at Remy investor Church House, adding while Remy does hold other brands its portfolio lacks exposure to popular spirits such as tequila.
"We'd like to see more acquisitions, more diversification," Mahon continued, adding however this has to be done well and Remy should focus on smaller, quality targets.
Remy's shares hit their lowest level since 2016 on Wednesday after its first-quarter sales missed estimates.
All spirits makers are enduring a sharp slowdown in growth following a post-pandemic boom. But Remy's rivals like Pernod Ricard's PERP.PA and Diageo's DGE.L operations are more balanced across different products and markets.
LONG ROAD
As well as a sluggish economy, cognac makers like Remy face the threat of tariffs from Beijing amid an EU-China trade dispute.
Persistent declines in Remy's U.S. cognac sales have led some investors like Nicolas Brault, associate director at Banque Hottinguer, another Remy investor, to wonder if cognac has fallen out of favour with its base of American drinkers.
"Is there a future for cognac in the U.S.?" he said. "That's the number one uncertainty."
He agreed Remy needs to diversify, but said ultimately cognac will remain the company's main product, on which its fortunes turn.
Chief Financial Officer Luca Marotta said on Wednesday Remy would invest a lot over the medium term to increase the size of its non-cognac business.
Remy CEO Eric Vallat meanwhile has said the company would look to grow sales in other nations, including in Europe and Africa.
The U.S. and China are the world's largest spirits markets, so any global player needs a strong business there, investors say. But Remy has to think about diversification given the challenges it faces, said Joseph Gabelli, a portfolio manager at Remy investor Gabelli Funds.
"I say that with full knowledge that it will be a long road," he continued, adding building up Remy's sales from other products and geographies will take time.
Reporting by Emma Rumney; Editing by Matt Scuffham and David Evans
Activos relacionados
Últimas noticias
Descargo de responsabilidades: Cada una de las entidades de XM Group proporciona un servicio de solo ejecución y acceso a nuestra plataforma de trading online, permitiendo a una persona ver o usar el contenido disponible en o a través del sitio web, sin intención de cambiarlo ni ampliarlo. Dicho acceso y uso están sujetos en todo momento a: (i) Términos y Condiciones; (ii) Advertencias de riesgo; y (iii) Descargo completo de responsabilidades. Por lo tanto, dicho contenido se proporciona exclusivamente como información general. En particular, por favor tenga en cuenta que, los contenidos de nuestra plataforma de trading online no son ni solicitud ni una oferta para entrar a realizar transacciones en los mercados financieros. Operar en cualquier mercado financiero implica un nivel de riesgo significativo para su capital.
Todo el material publicado en nuestra plataforma de trading online tiene únicamente fines educativos/informativos y no contiene –y no debe considerarse que contenga– asesoramiento ni recomendaciones financieras, tributarias o de inversión, ni un registro de nuestros precios de trading, ni una oferta ni solicitud de transacción con instrumentos financieros ni promociones financieras no solicitadas.
Cualquier contenido de terceros, así como el contenido preparado por XM, como por ejemplo opiniones, noticias, investigaciones, análisis, precios, otras informaciones o enlaces a sitios de terceros que figuran en este sitio web se proporcionan “tal cual”, como comentarios generales del mercado y no constituyen un asesoramiento en materia de inversión. En la medida en que cualquier contenido se interprete como investigación de inversión, usted debe tener en cuenta y aceptar que dicho contenido no fue concebido ni elaborado de acuerdo con los requisitos legales diseñados para promover la independencia en materia de investigación de inversiones y, por tanto, se considera como una comunicación comercial en virtud de las leyes y regulaciones pertinentes. Por favor, asegúrese de haber leído y comprendido nuestro Aviso sobre investigación de inversión no independiente y advertencia de riesgo en relación con la información anterior, al que se puede acceder aquí.
