For three weeks, former Shiseido and Chanel executive Franck Marilly will take a popular seat in Rémy Cointreau and join a business where sales and profits stumbled over the past 12 months.
Marilly also runs a spiritual group where Cognac is a category under significant pressure in the recent quarter, accounting for about 70% of sales.
It's clear that there will be a lot of gaskets for the new Rémy Cointreau CEO, and while market observers have many questions about the company's recent prospects, some believe there are some fundamental questions about the business's framing.
The group's last fiscal year lasted until the end of March, another tough time for Rémy Martin Cognac Maker.
Net profit fell 34.4% to 121.2 million euros ($138.4 million), and 36.8% organic. Operating profit fell 27.6% to 211 million euros. Full-year sales of Bruichladdich whiskey owners fell 18% to €984.6 million.
This is the second consecutive year of sales and revenue declines. Rémy Cointreau is affected by drought sales in the U.S. category (one of the two largest markets in that spirit) and pressure from China (pressure from another major destination).
The company tried to point out positive signs of its cognac business in both markets. In the Americas, sales in the fourth quarter "a sharp rebound" especially in the United States. The group added that despite the country’s “continued challenging market conditions,” Rémy Martin gained market share in China.
Marilly will serve as CEO as Rémy Cointreau will approach the end of the first quarter of its new fiscal year, and the market's eyes this week are exactly what the company thinks during the 2025/26 fiscal period.
Cointreau Liqueur Maker expects sales to return to “organic midpoint growth.”
It said that starting in the first quarter, recycling will be “mainly driven by a strong technical rebound to U.S. sales.”
However, to show that Rémy Cointreau's Cognac business has macro uncertainty, its guidance on "current operating profit" is accompanied by a warning. Treasuries in tariffs, not only imported to the United States, but also on EU freight in the EU, mean that Rémy Cointreau’s forecast for current operating profit is “high growth in the high unit to low double digit range” but “excluding any growth in customs duties in China and the United States”.
Currently, the company's "worst case" is the possibility of increasing tariffs to 100 million euros.
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In addition to Rémy Cointreau's full-year profit publishing yesterday, the company has become the latest major still to withdraw its interim guidance.
The group removed its targets in 2030 (drafted ten years ago), pointing to the “continuous lack of macroeconomic visibility”, uncertainty about tariff tensions and when the U.S. market will recover.
In February, Diageo took the quotation of “macroeconomic and geopolitical uncertainty” on the grounds of medium-term guidance. In the same month, Pernod Ricard cut its sales forecast, saying "strong geopolitical uncertainty" is hitting the spirits industry.
Analysts expect Rémy Cointreau's guidance to be withdrawn and more focus on the near-term prospects of the company's Cognac Portfolio in the United States and China, and more broadly, how tariffs affect the business.
“Management provides a more nuanced view of the U.S. exhaustion, confirming that while the quantity remains negative for the middle digits, trends are improving in turn. It is worth noting that VSOP exhaustion is nearly flat, supported by tactical pricing moves and smaller formats,” Barclays analyst Laurence Whyatt wrote in a comment to clients. However, he added that outgoing CEO Eric Vallat “warned that it is too early to announce a fully sold-out recovery”.
Throughout the Chinese Pacific, the market conditions of cognac are challenging for all brands, and even if Rémy Cointreau is able to provide some market share growth for a portion of its portfolio, however, as Bernstein's Trevor Stirling said, is this making progress across the entire range.
"The Chinese market is still very weak and there is no room for near-term upside," Bernstein said yesterday. "But, despite not mentioning Louis XIII, Remy has been continuing to share in XO, VSOP and e-commerce."
Whyatt reflects on the late appeal between Rémy Cointreau and analysts, and Whyatt said the company's management believes it can take advantage of its expected sales increase in the new fiscal year to strengthen its position on any changes in tariffs.
"It clarified that the assumed net tariff impact of €65 million could be reduced more aggressively than previous guidance," Whyatt said. "Management now believes that if the top momentum improves, the mitigation measures could be 50-60% higher than the initially conveyed 35%. This would reduce the current net impact on current operating profit to €25-3.3 million, indicating a lower than the initial fear."
All of this adds to Marilly's impression of getting into a very difficult one. The properties of RémyCointreau's business provide reasons for optimism. Its Cognac portfolio has a predisposition to quality from a few years ago, while its Liqueurs & Spirits divisions, home to brands like Bruichladdich, Cointreau and Botanist Gin, have seen organic sales rise by a third in the past five years (even if they fell 9% in 2024/25).
But maybe Marilly’s basic task is to make Rémy Cointreau a wider business without relying too much on Cognac.
An analyst who wants to remain anonymous said: “His biggest challenge is to further reduce the company from cognac and diversify from the United States and China.
Of course, this will take time - and requires the company to be active in the M&A market.
Last year, Rémy Cointreau made plans to find €50 million in fees during the fiscal period. Rémy Cointreau said yesterday that it has withdrawn 85 million euros over the past 12 months and 230 million euros over the past two years. It describes that more than half of these cuts are "structural savings."
The group's net debt to EBITDA ratio is 2.4 times, providing analyst advice that this is a certain action space. "The balance sheet is not too stretched and large-scale acquisitions are not allowed, but can be addressed if needed," they said. "It is important to take a clearer step from a category perspective and geographical perspective."
Elsewhere in the spirits, diageo, Pernod Ricard and Campari have sold assets in recent months, or say there will be more signals. However, these brands tend to stay away from higher-end products, Rémy Cointreau, in the past tends to arrive.
The new CEO of Rémy Cointreau will find the right "premium" assets, which are usually small and therefore may not immediately help any diversification attempts or expensive.
"It has to do something with what they call terroir, preferably aging, and there is a good story behind it," the analyst said. "That could be in tequila, maybe in (e)y, and I might also see the people who are most suitable for the company, which is probably the best growth opportunity."
“It makes sense to some extent to make some bold moves because, if you buy a smaller brand, it will take you a long time to really turn the balance toward fewer Cognacs. I know there may be fewer opportunities when you think about bold moves, but I’m definitely something I think the board should consider.”
Well, as we travel through 2025 and beyond, the new CEO of Rémy Cointreau needs to be thought carefully.
“The Challenge Facing the New CEO of Rémy Cointreau” was originally created and published by Just Drinks, a brand owned by GlobalData.
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