In less than three weeks, former Cisade and Chanel executive Frank Marily wins a Remy Controw hot seat and joins a business that has lost sales and profits over the past 12 months.
Marily is also at the helm of the Spirits Group, where Cognac, a category that has been heavily pressured in the recent quarter, accounts for around 70% of sales.
It’s clear that there are plenty of new Remy Controw CEOs in his tray, and while market watchers have a lot of questions about the company’s short-term outlook, there are a few basic questions about the structure of the business.
The group’s final fiscal year, which ran until the end of March, was another tough time for Remy Martin Cognac makers.
Net income fell 34.4% to 121.2 million euros ($138.4 million), or organically fell 36.8%. Operating profit fell 27.6% to 2211 million euros. The owner of Bruichladdich Whiskey saw an annual revenue decline of 18% to 984.6 million euros.
It was the second consecutive year that sales and revenues fell. Remy Cointrow has suffered a decline in cognac sales among the US struggled categories. This is the pressure of China, one of the two biggest markets of the spirit and another major destination.
The company is trying to point out positive signs of the cognac business in both markets. In the US, sales in the fourth quarter “a sharp recovery” especially in the US. Adding to the group, Remy Martin had gained market share in China despite the domestic “sustainably challenging market conditions.”
Marily took the reins as CEO as Remy Cointrow approaches the end of the first quarter of the new fiscal year, and the market eye this week was in the company’s thoughts on the 2025/26 fiscal period.
Cointreau Liqueur Maker expects sales to return to “medium organic growth in single digits.”
The recovery will be “driven primarily by strong technical rebounds of sales to the US,” he said, starting in the first quarter.
However, indications of macro uncertainty hanging on Remy Cointrow’s cognac business, attention has been paid to so-called current operating profit guidance. Tensions over tariffs over EU brandy freight towards China, as well as imports into the US, were that Remy Cointrow’s forecast for current operating profits was “in the single-digit high-to-low double-digit range,” but “excluding the rise in tariffs in China and the US.”
At the moment, the company’s “worst scenario” is a total of 100 million euros to potential increase in tariffs.
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Yesterday, in addition to publishing Remy Contraau’s full-year profits, the company became the latest major distiller to withdraw its mid-term guidance.
The group was created 10 years ago, drawing a target in 2030. It pointed out a “continued lack of macroeconomic visibility,” tensions over tariffs and uncertainty about when the US market will recover.
February, Diageo I pulled it Its medium-term guidance cites “macroeconomic and geopolitical uncertainties.” In the same month, Pernod Ricard cut sales forecasts, “Severe geopolitical uncertainty” It was a hit in the spirit sector.
Analysts expect more attention to the withdrawal of Remy Contraau’s guidance and the short-term outlook for the US and China cognac portfolio, and broader, how tariffs will affect business.
“Management has provided a more subtle view of the US depletion, confirming that volumes are medium-negative to single digits, but trends are improving one after another. In particular, VSOP depletion is supported by tactical pricing behaviour and smaller forms,” he added, however, that resigning CEO Eric Valatt is “alerting that it’s too early to declare a complete sellout recovery.”
Even if Remy Cointrow could eliminate the profits of some of the market shares in its portfolio across China’s Pacific, Cognac’s market conditions are challenging for all brands, but it is unclear whether that progress has been achieved across the scope, as Bernstein’s Trevor Sterling puts it.
“The Chinese market has been very weak and we don’t see any near-sized rise,” Bernstein said yesterday. “However, Remy has consistently gained shares in XO, VSOP and e-commerce, but there was no mention of Louis XIII.”
Reflecting on the outcome call between Remy Cointrow and analysts, Whyatt said the company’s management believes its position can be strengthened against tariff changes using forecast improvements in sales.
“We have revealed that the expected net tariff impact of €65 million can be more proactively reduced than previously guided,” Whytt said. “Management believes that if topline momentum improves, it could reach 50-60% from the first communication of mitigation, which reduces the net impact on current operating profit to 25-30 million euros, suggesting a more serious downside scenario than initially feared.”
That all adds to the impression that Marily is stepping into a rather tough job. There are attributes to Remy Controw’s business, which provides a basis for optimism. The Cognac portfolio is more premium bent if liqueurs and spirits, which have brands like Bruichladic, Contraud and Botanist Gin a few years ago, have increased organic sales by more than a third over the past five years (even if it has declined 9% on 2024/25).
But perhaps Marily’s fundamental challenge is to make Remy Cointrow a wider business, and not relying on cognac.
“His big challenge is to risk the company even more, diversify away from Cognac and diversify away from the US and China. Remy Cointrow is too dependent on both those countries and the Cognac categories,” said an analyst who wishes to remain anonymous.
Of course, that takes time and requires the company to operate in the M&A market.
Last year, Remy Cointrow planned to find a cost of 50 million euros during the accounting period. Remy Cointrow said yesterday that it extracted 805 million euros over the past 12 months and 230 million euros over the past two years. More than half of these cuts are described as “structural savings.”
The group’s net debt to EBITDA ratio is 2.4 times, suggesting room for operation by unnamed analysts. “The balance sheet hasn’t grown much and we don’t allow large-scale acquisitions, but there are ways to avoid that if necessary,” they said. “From a categorical perspective, geographically, it is important to take a clear step towards more diverse structures.”
Elsewhere in the Spirits, Diageo, Pernodricard, Campari and others have signalled that they will sell their assets or even more in recent months. However, these brands tended to move away from the more premium products Remy Cointrow had in the past.
The challenge for the new Remy Controw CEO is finding the right kind of “premium” assets.
“It’s something they call a terroir, hopefully aging and doing something with a good story behind it,” the analyst says. “It could be in tequila. It could be a whipping (E)Y. Here it is probably the best for the company and perhaps the best growth opportunity.
“It probably makes some sense to do a little bold move, because buying a small brand will actually take a long time to slowly move the balance into the cognac.
“The Challenges Faced by the New CEO of Remy Contreux” was originally created and published Just drinka brand owned by GlobalData.
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