Remy Cointreau Sales Growth Shows China Still Buying Cognac

(Bloomberg) -- Remy Cointreau SA sales growth accelerated in the second quarter as the distiller handily beat analyst estimates, damping concern that the slowing Chinese economy will weigh on cognac sales.

Key Insights

• For Remy Cointreau, as well as rivals Pernod Ricard and LVMH, it’s all about China at the moment. Remy Martin cognac sales rose 12 percent in the quarter, driven by sales in the region. Pernod’s update earlier this week was similarly bullish.
• Remy Cointreau’s higher-end strategy is working. The company has shifted away from cheap brands such as Passoa passion fruit liqueur, which sells for about $15 a bottle, to focus on cognacs and other drinks selling for $50 a bottle or more.
• No surprises on the outlook, though: Remy Cointreau repeated its standard forecast for full-year profit to rise, assuming constant exchange rates.

Market Reaction

• Remy Cointreau shares were down about 1 percent early Friday in Paris. They’ve fallen roughly 11 percent so far this year, after a strong run.