REMY Cointreau, the drinks giant which owns the Bruichladdich Islay malt, highlighted the impact of an early Chinese New Year as sales exceeded analysts’ forecasts in its third quarter.
And the Paris-listed company declared it expects to continue growing sales in China – despite concerns over slowing growth in the economic powerhouse.
Remy, which acquired Bruichladdich for £58 million in 2012, booked a 9.5 per cent rise in reported sales to €348 million in the three months to the end of December, with the timing of Chinese New Year adding impetus to the growth of its House of Remy Martin Cognac.
The company saw strong double-digit percentage sales growth in Asia-Pacific in the third quarter and over the first nine months of its financial year. This was led by Greater China and South East Asia, as the early Chinese New Year celebrations boosted sales in the region by €4m in quarter three.
READ MORE: Remy raises glass to Bruichladdich as sales surge
And Remy’s flagship House of Remy Martin brand saw organic sales growth of 13.1% in Asia-Pacific in the first nine months, driven by Greater China, Singapore, Malaysia and travel retail outlets.
The update underlines the recovery of the luxury spirits market in China, where sales of premium Scotch whisky and Cognac were badly affected by austerity measures and a crackdown on corporate gift giving and entertainment phased in by the Chinese Government from 2012.
Drinks heavyweights Remy, Diageo and Pernod Ricard are now back in growth in the world’s second-largest economy, as an emerging middle class drives demand for western spirits brands.
However, there is now concern that slowing economic growth in China could curb demand again. The Chinese economy was reported on Monday to have grown by 6.6% in 2018 – its slowest rate since 1990 – as attempts to rein in debt during the ongoing trade dispute with the US Trump take their toll.
Despite slowing growth in China, Remy left its guidance for “positive growth” in organic operating profit unchanged for the 2018/19 financial year. Analysts expect profits growth of 13.5%. “We continue to experience very strong business trends in China,” a spokeswoman for Remy in Paris said, adding that the company is experiencing growth in “strong double digits” in the market.
READ MORE: Scottish whisky and gin brands boost Remy Cointreau
Stock broker Jeffries acknowledged there was “some macro uncertainty” in China in a note to investors, but said the country “continues to show a very positive growth dynamic”.
Jeffries added: “Any slowdown [is] likely to be less severe than 2013-14 anti-extravagance action with easier navigation of de-stocking given a better view of inventory.”
Remy unveiled a 6.7% rise in overall reported sales to €919.4m in the first nine months of the year, in line with group forecasts. House of Remy Martin accounted for the lion’s share, with sales up 11.5% in reported terms to €642.8m.
The company’s liqueurs and spirits division, which includes Bruichladdich and The Botanist gin, saw reported sales rise by 5.2% to €79m in the third quarter, and by 0.9% to €206m in the first nine months. Remy noted that The Botanist had seen continued double-digit percentage growth in all geographies, as did its Scotch whiskies, “driven by the fast development of the Scottish malts in all three macro-regions” – the Americas, EMEA (Europe, Middle East and Africa) and Asia Pacific.
The spokeswoman said the company was seeing “very healthy growth across the world for the Scottish malts”.
Remy said: “The group’s two growth engines – the Asia-Pacific region and the Americas – demonstrated excellent momentum over the period, and particularly in the third quarter.
“With sales in the first nine months fully in line with group forecasts, Remy Cointreau confirms its guidance of growth in current operating profit over the 2018/29 financial year.”
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