Cognac-maker Rémy Cointreau hit by China crackdown

Changes in China have floored cognac-maker Rémy Cointreau.

An almost 40% plunge in operating profit announced today by the Paris-based firm was largely attributed to a government crackdown on corporate gift-giving and lower consumption at celebratory dinners in the country.

Rémy had warned two months ago that its profit would fall and today’s figure of €150.2 million (£122 million) for the year to April was in line with this alert but below analysts’ expectations.

Cognac accounts for 80% of Rémy’s operating profit, and half of that demand comes from China where premium drinks such as its Louis XIII cognac proved particularly popular.

Its cognac division collapsed 44% in the year: Rémy said “weak sales in China in the context of a transforming spirits market” has hurt its business in the region but it said it will continue to focus on the “upmarket positioning of its brands”. The drinks-maker, which sells nine brands including Cointreau liqueur, cut its dividend by 9.3%.

Rémy is also looking for a new boss after its chief executive Frédéric Pflanz resigned in January after only 100 days in the role.