Remy Cointreau and Distell suggest brighter wine future

By Neil Merrett

- Last updated on GMT

Related tags Remy cointreau Economics

A number of wine and spirits makers suggest the industry should remain optimistic in the long-term over sales growth, despite the potential impact of the economic downturn on consumer demand.

Remy Cointreau, which supplies Cointreau and Remy Martin, said that it expected operating profit for the current financial year to fall by around 15 per cent on an organic basis. The fall was blamed in part, to wholesalers destocking amidst falling demand in some markets.

However, the group said that it hoped it would return to profitability in the future at the same time that South-Africa-based wine group Distell said that strong potential remained in the global market despite some difficulties for wine.

Difficulties have been present in Remy Cointreau’s current financial year.

Falling sales, particularly in the group’s Champagne division and restructuring of its operations, saw sales decline on an organic basis by one per cent to €604.5m for the nine-month period ending 31 December 2008.

Remy Cointreau reported that sales of its spirit and liqueur brands had fallen by 1.3 per cent over the same period, while cognac demand remained strong growing by 4.2 per cent.

Sales within its distribution business were also down, falling by 14.9 per cent over the same period last year, though the group attributed this in part to the planned cessation of contracts for Russian vodka and Californian wine.

The group said though that it aimed to return profitability in its operations on an organic basis years in the future, in line with the more positives performance of the last four.

This longer-term optimism was shared by Distell, which is continuing to try and extend its portfolio of budget and premium brands into markets like the UK by cooperating with retailers such as Thresher and Waitrose.

Budget push

Donald Gallow, international director for the group, said that despite a push into the UK budget wine market, it saw a healthy future ahead for more varities of the product, even with some consumers spending less.

“Although the value segment does not represent the major thrust of our wine business, we believe it to be an appropriate focus in the current downturn,”​ he stated. “Nevertheless, we are optimistic of growth across all our price points.”

Demand claims

Gallow, citing projections from the International Wine and Spirit Record it claimed predict a six per cent rise in global consumption figures between 2008 and 2012, said there was strong potential for suppliers of wine in the future.

“[The figures suggest] that the financial and economic crisis affecting many wine-consuming countries worldwide will have ‘limited’ consequences for the growth of the sector,”​ he added.

Although Distell said that it remained focused in providing its higher priced wines to global consumers, it had launched its Danger Point range into a number of UK stores in a bid to offer varietals of wine for £5 (€5.3) per 750ml bottle.

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