Remy Cointreau Sees Strong China Rebound With $80,000 Cognac

(Bloomberg) -- Remy Cointreau SA is confident it can raise prices in China this year, buoying its profit outlook as the French distiller seeks to sell more high-end cognac for as much as $80,000 a bottle.

The maker of Remy Martin will raise prices 3 percent to 5 percent after similar increases last year, Chief Financial Officer Luca Marotta said on a conference call Wednesday. The company joins Hennessy-owner LVMH in calling a comeback in China, where the government’s four-year campaign against conspicuous consumption had dented sales of international spirits.

“We’re very, very confident on China,” Marotta said. “The company gained significant market share in value, and that’s the name of the game.”

Remy Cointreau said it’s seeing a sharp acceleration in private consumption in the country, stoking sales of its most expensive offerings as Chief Executive Officer Valerie Chapoulaud-Floquet seeks to turn the distiller into the world’s leading provider of high-end spirits. In September, the company opened a store in Beijing to sell Louis XIII, a blend of 1,200 cognacs between 40 and 100 years old that reaches its top $80,000 price in giant Methuselah bottles.

The company’s expectations for fiscal 2017 earnings are in line with the analyst consensus estimate of 10 percent to 11 percent organic growth, Marotta said.

The shares gained 1.2 percent to 93.38 euros at 1:16 p.m. in Paris. They earlier dropped as much as 6.1 percent on concern over a fourth-quarter slowdown in its liqueurs and spirits division, which includes The Botanist gin and Bruichladdich scotch.

Other highlights include:

• Fourth-quarter organic sales growth was 0.9 percent, while the company-compiled consensus was for a 1.7 percent increase
• Sales of liqueurs and spirits declined 7.7 percent as St Remy brandy suffered in Nigeria and the company reduced volumes of Mount Gay rum
• Sales of Remy Martin rose 6.2 percent, matching the consensus estimate
• Remy Cointreau CFO said he doesn’t see major acquisitions in coming quarters
• Fiscal 2017 earnings scheduled June 8
• Company expects 22 million-euro impact in fiscal 2018 from Passoa, Champagne deals

To contact the reporter on this story: Thomas Buckley in London at tbuckley25@bloomberg.net.

To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, Thomas Mulier, Paul Jarvis