HEALTHY COGNAC SALES MAKE GOOD RESULTS FOR REMY COINTREAU

Remy Cointreau logo

Source: Jefferies International Limited

Edward Mundy

September 27, 2018

We expect a continued strong performance in the Cognac division (c.80% profits) and expect 2QE group org sales +9.0% (vs 1Q 5.9%). We like Remy's category exposure and see upside as the CEO rolls out her vision for the co as a super-premium business. While we like Remy, trading at 29.9x cal 2019 PE, shares need upgrades to perform. We remain at HOLD.

What's new? Remy reports 1H sales on 17 October. We expect 1H org sales +7.6% with 2Q +9.0% vs 1Q 5.9%. The drivers of the acceleration in 2Q, we believe, are continued robust cognac demand (we model 2Q cognac org sales +12% vs 1Q +11.1%) with benefit of easier comps, as well as some positive impact from technical effects in Partner Brands. For full details of our expectations, refer to detail within this report.

Cognac (67% sales / 81% profits) - likely to remain robust. We model 1H cognac org growth +11.6% with 2Q +12% vs 1Q +11.1%. Within this, we expect US and Europe to be a bit stronger vs 1Q. Whilst Asia depletions (sell-out) momentum is likely to be unchanged vs 1Q (vols solid DD, sales strong DD), we believe shipments (sell-in) will be more normalised. In 1Q, China cognac shipments ran modestly ahead of depletions with some inventory replenishment after the strong CNY; we expect shipments to match depletions in 2Q.

RESULTS OF THE 2017 COGNAC HARVEST

 

Cognac Vineyard & Grappes

Cognac harvest and production is estimated better than expected in the Cognac Appellation this year 2017 with 90hl/ha reported the Sud Ouest newspaper.

With a % alcohol of 10% the extracted % is higher than expected making this a much better harvest than previously forecasted.

Source: SUDOUEST

THE HARVEST IS OVER IN COGNAC AND THE PROSPECTS ARE GOOD FOR THIS VINTAGE

In Charentes, the home of cognac, volume is predicted to climb 12 percent to 8.82 million hectoliters from 7.88 million hectoliters, with a warm and dry September halting the development of botrytis and mildew fungal disease.

Harvest of the ugni blanc grapes used for distilling cognac started late September, with “clearly” higher-than-usual grape weight compensating for a reduced fruit count. 80% of the harvest suffered from difficult climates during the summer with hailstorms earlier in the summer mid june to late June. And a rainy summer, with a cooler than usual August. September was surprisingly sunnier which allowed for a last minute recovery of the situation.

99% of the producers have completed their harvest as of today.

[youtube=http://www.youtube.com/watch?v=QwZ5TCcE8bk&w=560&h=315]

Distilling cognac will start in 3 weeks. Regulations allow distillation to be operated from 15th November to 31st March. Right now producers are focused on fermenting their juices into wines in times for the 4 1/2 months distilling season.

9 liters of wine with 9% Alc/Vol will produce 1 liter of eaux-de-vie with 70% Alc/Vol. Eaux-de-vie is the name of the spirit produced from distillation. Only after it is aged 2 years in oak barrels, the eaux-de-vie is then called cognac.

RESULTS OF THE 2014 WORLD BEST COGNAC FOR VSOP, XO & EXTRA ARE PUBLISHED: ROYER AND COMANDON WIN ALL

The World Spirits Competition in San Francisco is regarded as the No.1 spirits competition in the world. This competition is the most comprehensive international spirits judging conducted every year since 2000. Products are evaluated by top spirits professionals and are judged in a blind, consensual procedure ensuring integrity and making this annual competition the most followed competition in the spirits industry.

They only rate spirits and over 3,500 spirits are competing every year.

This year in 2014 for the first time the competition has recognized the best cognacs according to the 'classic cognac quality standards', that is VS, VSOP and XO, which is making the winners' list more interesting than before.

The winners are:

2014 WORLD BEST COGNAC  VSOP = LOUIS ROYER VSOP FORCE 53

Louis Royer Cognac VSOP Force 53

2014 WORLD BEST COGNAC XO = COMANDON XO

Comandon XO, 2014 World Best Cognac XO

2014 WORLD BEST COGNAC EXTRA = LOUIS ROYER EXTRA

Louis Royer Cognac VSOP Force 53

Source: www.sfspiritscomp.com

2013 RESULTS OF THE WORLD SPIRITS COMPETITION: BEST COGNAC FOR LOUIS-ROYER

2013 World Best Cognac, Louis-Royer VSOP Force 53

The San Francisco World Spirits Competition is regarded as the most respected spirits competition in the world. The Competition was the first comprehensive, international spirits judging ever held in the United States on an annual basis. Products are evaluated by top spirits professionals and are judged in a blind, consensual procedure ensuring competitive integrity and making this annual competition the most reputable and recognized competition in the spirits industry.

The 2014 Competition took place on March 20th through the 23rd at the Hotel Nikko in downtown San Francisco.

The 2013 Results were officially announced,  April 3, 2013, but they were not very clear so I had to delayed the announcement to confirm a few things:

Cognac VS or Equivalent

Double Gold Medal, Camus Cognac VS Elegance, www.camus.fr

Gold Medal, Bossard Cognac VS, www.bossardcognac.com

Gold Medal, Hennessy Cognac VS, www.hennessy.com

Silver Medal, Camus Ile De Ré Fine Island Cognac, www.camus.fr

Silver Medal, Comandon Cognac VS, www.comandon.com

Silver Medal, Courvoisier Cognac VS, www.courvoisier.com

Silver Medal, Landy Cognac VS, www.landycognac.com

Bronze Medal, Hennessy Black, www.hennessy.com

Cognac VSOP or Equivalent

BEST COGNAC,
Double Gold Medal, Louis-Royer Cognac Fine Champagne VSOP, Force 53, www.louis-royer.com

Gold Medal, Camus Cognac VSOP Borderies, www.camus.fr

Gold Medal, D'USSÉ Cognac VSOP, www.dusse.com

Gold Medal, Gautier Cognac VSOP, www.cognac-gautier.com

Silver Medal, Bossard Cognac VSOP,  www.bossardcognac.com

Silver Medal, Camus Cognac VSOP Elegance, www.camus.fr

Silver Medal, Camus Ile De Ré Fine Island Cognac, Double Matured, www.camus.fr

Silver Medal, Camus Ile De Ré Fine Island Cognac, Cliffside Cellar, www.camus.fr

Silver Medal, Cognac De Luze Fine Champagne VSOP, Grande & Petite Champagne, www.choose-delight.com

Silver Medal, Comandon Cognac VSOP, www.comandon.com

Silver Medal, Courvoisier Cognac VSOP, www.courvoisier.com

Silver Medal, Grand Breuil Cognac Elite, www.cognac-tessendier.com

Silver Medal, Landy Cognac VSOP, www.landycognac.com

Silver Medal, Louis Royer Cognac VSOP Preference, www.louis-royer.com

Silver Medal, Merlet Cognac Brothers Blend, www.merlet.fr

Cognac XO or Equivalent

Double Gold Medal, Gautier Cognac XO Pinar del Rio, www.cognac-gautier.com

Gold Medal, Campagnère Cognac Belle Epoque Borderies, www.cognac-tessendier.com

Gold Medal, Cognac De Luze Fine Champagne XO, Grande & Petite Champagne, www.choose-delight.com

Gold Medal, Courvoisier Cognac XO, www.courvoisier.com

Gold Medal, Gautier Cognac XO Gold & Blue, www.cognac-gautier.com

Gold Medal, Louis Royer Cognac XO, Force 53, www.louis-royer.com

Silver Medal, Camus Cognac XO Elegance, www.camus.fr

Silver Medal, Comandon Cognac XO, www.comandon.com

Silver Medal, Drouet & Fils Cognac XO Cuvée Ulysse, www.cognac-drouet.fr

Silver Medal, Landy Cognac XO, www.landycognac.com

Silver Medal, Leopold Raffin Cognac XO, www.rlaclie.com

Cognac Extra-Aged

Silver Medal, Louis Royer Cognac Extra Grande Champagne, Force 53, www.louis-royer.com

Thirty-four spirits experts convened at the Hotel Nikko in San Francisco from March 21st through the 24th, 2013, for the 13th Annual San Francisco World Spirits Competition. The 2013 Competition had record entries, up 17% from last year. Distillers and importers submitted 1407 spirits from 63 countries into 85 different classifications. This year Suntory Ltd. from Tokyo, Japan, was awarded "The Tasting PanelMagazine Distillery of the Year", "Importer of the Year" was captured by Pernod Ricard USA, New York, NY, while the "Director's Award" was won by William Grant & Sons, New York.

Congratulations to Louis-Royer Cognac for winning the 2013 World Best Cognac for its VSOP!

Source Infos: SF World Spirits Competition

Source Photo: www.louis-royer.com

REMY COINTREAU IS POSTING VERY POSITIVE RESULTS

Remy Cointreau Logo

Rémy Cointreau has posted a healthy jump in year-to-date sales as Cognac sales remained strong despite the later Chinese New Year.

Total sales rose by 17.5% to $1.29bn US in the nine months to the end of December, with Rémy's own brands up by 20.6%. Sales of its Rémy Martin brands increased by 12.4% in the same period, as super-premium Cognac in Asia continued to grow.

Cognac sales in the US were also buoyant while Rémy's liquor and spirits posted “strong gains” in the country.

The results build on already strong comparisons from the same period last year when Cognac sales grew 18% up. Net sales in 1st quarter were up by 13.30% compared to 2012 first quarter.

Sales in Europe remained buoyed by Russia and increased, together with some Western European countries.

Today's results included a full quarter of sales of Bruichladdich, which Remy Martin purchased in 2012 for approximately $90 million US.

To read Remy's official statement, click here.

THE 2012 and 7TH ANNUAL EDITION OF LA PART DES ANGES AUCTION RESULTED IN 136,000 euros OF WINNING BIDS

2012 7th Annual edition of La Part des Anges auction was successful with this year with a result of 136,800 euros for the 27 cognacs auctioned.

This is more than 30% increase from last year auction.

The grand prize for the highest bid went to a Malaysian guest of Martell who purchase Cordon Bleu Centenary Edition for 21,000 euros.

The lowest winning bid was 900 euros and the 2nd highest was 14,000 euros.

It would be great to hear what the two charitable organizations, ie. Ordre de Malte and Parenthese are going to do with the money so as to give more impact to this event. We will share with you if we can find out. I invite you to learn more about the 'Order of Malta' in short or more officially called The Sovereign Military Hospitaller Order of Saint John of Jerusalem of Rhodes and Malta. It is even older than cognac since it was established in 1048 during the Crusades, it is also fascinating and mysterious, not to say secretive kind of like 'cognac'!

In total this was about 700 guests from the cognac houses that attended the event at the chateau Chesnel in Cherves-Richemont.

Beautiful Chateau Chesnel Cherves-Richemont

Source: www.Charentelibre.fr

The Other Games in the UK - Results of the 2012 International Wine & Spirit Competition

I am going to talk about the UK and gold medals ... I know everyone has the eyes riveted on the UK right now watching the London 2012 Olympic Games but this is not about the OG. This is a different kind of competition called the International Wine & Spirit Competition (ISWC).

The International Wine & Spirit Competition released the results of its 2012 ratings for spirits this week. The results for the wine category were already announced in June. Traditionally, spirits results come one month after the wines.

ISWC was founded in 1969 and is one of the premier wine & spirits rating international competition. SEE PREVIOUS BLOG in JULY 2012 for a review of the best wine & spirits rating competitions. Its aim is to promote the quality and excellence of the world's best wines, spirits and liqueurs.

Besides the rigorous judging completed by a panel of professional experts at the ISWC, this competition is unique in the sense that the spirits are lab tested through chemical and microbiological analysis by an independent laboratory. This add a rather scientific twist to this competition which I have find rather academic and professional but it does not play much role in the rating itself.

My Comments:

. Congratulations to Baron Otard which I think is the ‘grand’ winner from this competition. As a matter of fact, right now I am working on a blog just on Baron Otard as I was there a few days ago dressed like a tourist walking around incognito. My take is that they have made a great improvement towards better quality cognacs.

. These ratings also announce the return of Bisquit I suppose.

. Rémy Martin VSOP Mature Cask Finish Cognac (receives Silver Outstanding) is the new expression of Remy VSOP and it is replacing the enigmatic dark green frosted bottle with a more common clear glass bottle. I like to see the color of cognac so I am more in favor of the clear glass. But I am sure it must not have been an easy decision to make.

. Courvoisier 21 and 12 collection is not consensual but it surely get a great score with a gold medal for the 21.

. As one would predict, Hine is particularly well represented with modest ratings for the premium cognacs. I think their Hine Rare VSOP is outstanding so no surprise to me.

. Cognac Park Extra is rewarded with a gold medal which is perfectly justified.

. Many private labels and sub-brands have done well, so business as usual.

. Some surprises and questions unanswered to me: why they are so many brands which have their VS and XO rated the same, as well as for instance the 4 distilleries from Royer rated the same, I do not think it is possible and I wonder ... I have had a number of experience where I could not prefer a VSOP to a VS, or an XO to a VSOP, but there should be a significant gap in evaluating between a VS and an XO!

GOLD OUTSTANDING MEDAL

Baron Otard VSOP

Hine Rare VSOP

Frapin Chateau Fontpinot Cognac Grande Champagne XO

ISWC Winners 2012

GOLD MEDAL

Courvoisier 21 Cognac Grande Champagne

Bisquit Cognac VSOP

Bisquit Prestige Blended Cognac VSOP

Cognac Park XO Extra Grande Champagne

Louis Royer Extra Grande Champagne Cognac

Dupuy Tentation Cognac XO

SILVER OUTSTANDING MEDAL

ABK6 Cognac Extra

Cognac Leyrat VSOP Premium Fins Bois

Cognac Leyrat XO Fine Bois

Double Crown Cognac VSOP (ABK6)

Courvoisier XO

Baron Otard VS

Baron Otard XO Gold

Cognac Croizet 989

Cognac de Luze XO Fine Champagne

Pierre Ferrand Ancestrale

Cognac Campagnere VSOP

Rémy Martin VSOP Mature Cask Finish Cognac

Rémy Martin Vintage 1989 Cognac

H by Hine VSOP

Bache-Gabrielsen Grande Champagne Cognac Hors d'Age

Cognac Prulho Eclat XO

SILVER MEDAL

A. de Fussigny XO 24 Carats

Cognac Reviseur XO Petite Champagne

Double Crown Cognac XO Extra Petite Champagne (ABK6)

Albert De Montaubert Cognac Extra  http://www.montaubert.com

Chevalier Cognac VS

Courvoisier VS

Bisquit Cognac VS Classique

Bisquit Blended Cognac XO

Marks and Spencer Monnet Cognac VSOP

Ile de Ré Fine Island Cognac

Camus VS Elegance Cognac

Camus VSOP Elegance Cognac

Camus XO Elegance Cognac

Baron Otard Extra 1795

Cognac Croizet XO Grande Champagne

Cognac Croizet Expo Universelle

Cognac Alfred de Luze Fine Champagne

Cognac Gautier 1755 Extra

Cognac Gautier VSOP

Cognac VSOP Prince Hubert de Polignac

Deau Cognac Black Collection

Deau Cognac Louis Memory Collection

Deau Cognac VSOP

Richelieu XO Fine Champagne Cognac (Distell Ltd)

Merlet Cognac Brothers Blend

Rémy Martin Centaure Cognac

Rémy Martin 1898 Coupe Fine Champagne

Hine Antique XO 1er Cru

Jenssen Cognac XO Grande Champagne

Jenssen Epiphanie Hors d'Age Cognac Grande Chamapagne

Vieux Garçon Cognac V.S.  (Lidl UK)

Hienoa Konjakkia VS 6 Year Old  ( Lignell & Piispanen - lignellpiispanen.fi )

Louis Royer VS Cognac

Louis Royer VSOP Cognac

Louis Royer XO Cognac

Distillerie Chantal Bons Bois Cognac (Louis Royer)

Distillerie D'Aumagne Fins Bois Cognac (Louis Royer)

Distillerie des Saules Borderies Cognac (Louis Royer)

Distillerie de L'Ecole Petite Champagne Cognac (Louis Royer)

Cognac Leopold Raffin VSOP

Martell XO

Hine Homage to Thomas Hine Cognac XO

XO Royal Prince Hubert de Polignac

BRONZE MEDAL

Courvoisier Connoisseur Collection 12 YO

Ile de Ré - Double Matured Cognac

Ile de Ré - Cliffside Cellar Cognac

Cognac Croizet VSOP Grande Champagne Cognac

Cognac Croizet Extra Grande Champagne

Pierre Ferrand Sélection des Anges

Cognac Gautier VS

Cognac Gautier XO Gold & Blue

Cognac VS Prince Hubert de Polignac

Cognac XO Prince Hubert de Polignac

Deau Cognac VS Elegance

Deau Cognac XO Collection

Cognac Park XO

Cognac Campagnere XO

Cognac Maison Rouge VSOP (ie, Hardy/H. Mounier)

Martell Cordon Bleu