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Remy's Risky Business

The cognac maker wants to cut costs by getting rid of its distribution network. That might be a bad idea ...

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... "It’s very risky," said Fortis bank analyst Severine Ble. She argued that large players like Pernod Ricard had the necessary muscle, in terms of experience, brand name and volumes, to pursue a distribution strategy. It would far more challenging for a firm like Remy Cointreau, which is far smaller and has six brands to its name, to do the same.

While Pernod Ricard and Diageo have cheaper brands like Jacobs Creek and Guinness to fall back on in the downturn, Remy is a pure-play premium producer, peddling the likes of Piper-Heidsieck champagne. Remy attributed the 30.0 million euros ($39.5 million) of revenue declines in the fourth quarter to destocking by clients, especially in the United States and Russia.

The company said that full year revenues fell 11.6%. By contrast, Pernod is expecting a double digit rise in profits for the year ending in June, while Diageo is sticking to its expectations of 9.0% annual profit growth.

Remy Cointreau shares were down 1.5%, or 30 euro cents (40 cents), at 19.50 euros ($25.66), in Paris.

[Estimated timeframe:2009-2015]

All data sources are attributed with links to the original insight. The insight is then summarised and, where appropriate, enhanced with additional information.

Source: Forbes.com
MTT insight URL: http://marketingtrendtracker.com/article.aspx?id=3924

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