Rémy Cointreau, Biggest Rally in SBF 120 at Closing Wednesday, July 13, 2022 – 07/13/2022 6:19 PM.

(AOF) –

Remy Cointreau

(+2.63% to €183.70)

Certain defensive stocks were sought on the back of risk aversion.

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the main points

– Spirits group born in 1703, with 12 international brands – Remy Martin, Brillet and Louis XIII cognac, diversified in wines and spirits with Cointreau and Metaxa for spirits, Mount Guy for rum, Botanist for gin, whiskey, Bruichladdich, Port Charlotte, Oakformor , Westlan and Hots Glasses;

– sales of 1.3 billion euros divided into 3 divisions – cognac by 72%, spirits by 25% and partner brands by 3%;

– International standing, the United States is the group’s leading market (55% of sales in the Americas), ahead of Europe, Middle East and Africa (17%) and Asia Pacific (28%));

Business model: Become #1 worldwide in exceptional spirits and control of the distribution circuit (85% of sales), in order to control the sale of exceptional spirits, with a unit price of over $50;

– The capital is controlled by the founding families (almost 57% of the shares and more than 70% of the voting rights), Eric Vallat is the Managing Director and Marcel Herrard Dubrell is the Chairman of the 12-member Board of Directors;

– Strong balance sheet enhanced by dividend payout, with net debt rating of A and leverage reduced to 0.77.

Challenges

Ambition to become a world leader in morale, to achieve 2030 goals, with a gross margin of 72% by increasing its unit value and an operating margin of 33%;

– An innovation strategy focused on the growth of e-commerce, which has been accelerated through partnerships, such as those with Alibaba (1/5 digital sales in China);

– Environmental strategy “Sustainable Exception 2025”: aims to be carbon neutral by 2050, 100% responsible purchasing, 62% of surface areas with responsible agricultural practices, 82% of renewable electricity;

– Strengthening of the whiskey division: the launch of a product made in France, the second most consuming country of the beverage, and the two sales campaigns of Bruichladdich in China and the United Kingdom;

– after the merger of the house of J.R Brillet cognac and the house of champagne J. de Talmont and the sale of shares in the joint venture Pesso, which increased the size of the portfolio;

Supporting market valuation by controlling strategic stocks valued at more than €50 per share, facilitating customer acceptance for increased sales prices.

Challenges

– Increased seasonality of sales, and then the fiscal year ended on March 31;

– lack of critical volume compared to competitors and strong reliance on Maison Rémy Martin (+ 80% of operating profit) for cognac with better profit margins than liquors and spirits;

– 54% growth in sales and a doubling of net profit in the first half of the fiscal year ending March 31.

2021/20 outlook: Despite restrictions in China and huge investments in marketing and communications in the second half, towards a sharp increase in sales and operating margin.

The development of the Chinese dairy industry

The Chinese government encourages the consumption of dairy products to improve the nutrition and immune defenses of the population, while striving to reduce the country’s dependence on imports. Wanting to turn the page on the melamine baby milk scandal, which affected 300,000 children in 2008, milk production began to rise again in the country, after ten years of stagnation. The main industrial groups (Mengniu, Yili, Youran or Modern Dairy) do not export and focus on the domestic market, which is growing at 4 to 5% annually. They develop very large farms and rely heavily on innovation, investing four times as many as all of their competitors in the world.

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