Fine cognac is one of those rare things that unites 18th century aristocrats and modern gangster rappers, whose love for the drink has repeatedly spilled over into their lyrics.
That revived cognac sales once before, but the industry could do with another pop culture boost, right about now.
Rémy Cointreau, the French family-owned cognac maker behind Rémy Martin, Cointreau, Mount Gay and The Botanist, has had a rocky few months.
After the heady days of the pandemic, it’s been stuck in a rut of falling demand from its largest markets—the U.S. and China. Rémy’s operating profits dropped 27.8% to €304.4 million ($330.9 million) in the year to Mar. 31, while sales for that period were down 19.2%.
Within the cognac division specifically, sales fell by 25% compared to a year ago.
“We are approaching this year with determination and remain fully focused on the recovery of the American market,” CEO Éric Vallat said in a statement.
There’s light at the end of the tunnel, the company thinks—it sees growth picking up in the current year ending March 2025, although the first half could still be dragged by a slowdown in the States. Asian markets, dominated by China, are also showing early signs of recovery.
Vallat also highlighted during a call that even though profits fell, it was still the third-best result in the company’s history. Rémy Cointreau’s cost-cutting efforts have surpassed its target of €100 million ($109 million) by achieving €145 million ($157.7 million) in savings.
“We are well equipped to hang on,” he said.
Cognac’s place in the spirits market
Cognac is a cultural phenomenon, with deep ties to the African-American community, which still consumes five times more cognac than white Americans.
It first found its way into hip-hop in Jay-Z’s Can’t Knock the Hustle in 1991, when the rapper reflected on “sipping Rémy on the rocks.”
When Busta Rhymes suggested we all Pass The Courvoisier (Part II) in 2002, the latter brand reportedly had a 30% sales boost, while Drake’s “I need a one dance, got a Hennessy in my hands” still rings in the ears eight years after its release.
Rémy Cointreau has certainly leaned into those influences in reaching customers over the years, like when it turned to Pharell Williams and later Usher for collaborations.
In recent years, the high-end alcoholic beverage has faced the same challenge as the rest of the luxury industry—a fall in demand as consumers pull back on spending. The rise of premium tequila has threatened to snatch some business from cognac in the U.S., putting it in further trouble.
At the same time, cognac houses have been impacted by China’s anti-dumping probe, which was launched earlier this year, targeting French brandy.
These global trends are problematic, given that 97% of cognac is exported, and have hurt Rémy Cointreau’s peers, including LVMH’s Hennessy, which also had a rough 2023.
Things are generally stabilizing, however, with experts attributing lower sales and profit figures following the pandemic to a return to longer-term trends.
“Rémy benefited from a period of accelerated growth during the COVID-19 pandemic followed by a period of normalization. Our analysis suggests that the excess growth has broadly reversed, putting Rémy in a better position to achieve positive value growth going forward,” Deutsche Bank analysts wrote in a note in March, adding that they don’t think cognac is losing out in a battle with tequila.
It’s tricky to gauge how consumers may feel about buying alcohol a few months from now. But for the moment, it appears the worst might be behind Rémy Cointreau.
