Dear Client: 

It was a tough year for Remy Cointreau, with global sales down 9% for the fiscal year ended March 31. 

The company was already facing “a number of situational factors” in the first nine months of its fiscal year, such as strong comps, route to market changes, and slow replenishment, according to cfo Luca Marotta. Then came COVID-19, which really dragged down Q4 results. Global sales were down 24% in Q4. 

In the Americas, organic sales were down 4.3% for the year, with the US down low-single digits. In the US, weaker cognac sales were partially offset by liqueurs & spirits division performance. 

BRAND PERFORMANCE. House of Remy Martin sales and depletion trends were down mid-single digits in the US for the fiscal year, due to reduced inventory levels.

Overall, liqueurs & spirits (Cointreau, Metaxa, Mount Gay, St. Remy etc.) global sales were down 3% for the fiscal year. 

In the US, Cointreau sales were boosted by buoyant depletion trends, up 5.7% for the full year despite a sales decrease of -4.1% in Q4. “In Q4, the weakness of the depletions mainly reflected the postponed price increase,” said Luca on this morning’s earnings call.  

The Botanist continued to report strong sales growth, led by performance in the US. 

The group’s single malt whiskies “continue to benefit from the positive worldwide momentum in the category, particularly in the US,” according to Luca.

ADAPTING TO COVD-19. Similar to other companies, Remy cancelled and/or reduced “all non-strategic” advertising & promotional spend in Q4, and will continue to do so in Q1. There will be an “increased focus on digital because the new normal after the COVID will drive to a more digital, even more than before,” he said. 

Luca also detailed a few digital initiatives implemented recently, including Margarita Mondays and the Cointreau Cocktail Hour. As part of the cocktail hour, “Cointreau invites a bartender to create a cocktail during a live session on Instagram. At the end, clients can tip the bartender by donating to the US Bartender Guild foundation and the tip is matched by Cointreau” up to $10,000, he explained. 

LOOKING AHEAD. Not surprisingly, the company expects COVID to impact Q1 sales as well. Luca expects top line shipments to “decline sharply” by 50%-55% in organic terms. 

“At this point in time, we expect to see some gradual sales recovery in the second quarter…,” said Luca. “In anticipation of that, we decided to reopen our cognac production site on April 14 and the Angers site for Cointreau and other liqueurs & spirits business on April 20… Of course, with all the security measures that are required for the safety of our employees, which is the most important thing.”

SURVEY: WINERIES CHANGE UP MARKETING STRATEGIES & SEEK FEDERAL AID TO MITIGATE COVID-19 IMPACT

WineAmerica published results from a new online survey of about 727 wineries across 45 states, focusing on the impact of COVID-19 on operations specifically between March 15 and April 15. 

A snapshot of those surveyed: 70% of respondents produce fewer than 5,000 cases, 24% between 5,000 and 25,000 cases annually,  4% between 25,000 and 50,000 and 2% produce over 100,000 cases annually. Nearly 57% reported annual sales under $500,000, 33% between $500,000 and $2.5 million, and 9% rake in over $2.5 million annually. 

To make up for lost tasting room and other on-premise sales, wineries are getting creative. When asked what marketing strategies they’ve used to try and make up for losses, 84% said curbside winery pickup, followed by reduced shipping costs (63%) and special DTC promotions (60%). 54% said they used home delivery by winery personnel, while 53% provided wine club specials and just about 28% hosted virtual wine tastings. 

Other highlights from the survey:

• 62% of respondents slowed production for the month and 15% stopped production altogether. 
• The average winery had to lay off more than 5 employees. 25% said they didn’t have to lay off anyone. 
• Wholesale sales were down 30% on average compared to the same period last year. 
• The average winery increased direct-to-consumer sales by 8%, with some reporting double or triple digit increases.  
• The average winery projected a 22% drop in grape purchases and 9% in bulk wine. 

Moreover, many are seeking federal aid. Nearly 70% of respondents said they’re seeking Paycheck Protection Program loans, 52% are asking for Economic Injury Disaster Loans, and 5% are going after USDA Disaster loans. Only 14% of respondents said they’re not seeking any aid at all. 

“Wineries and tourism have a symbiotic relationship,” says WineAmerica president Jim Trezise. “The romance of ‘wine country’ attracts millions of tourists, who are the lifeblood of the industry, especially for the smaller wineries. Marketing innovations have mitigated the losses due to closed tasting rooms, but not entirely, and the situation will get worse as more times goes by.” 

WSD BRIEFS: 

375 PARK AVENUE SPIRITS AND INTERNATIONAL BEVERAGE HOLDINGS LTD PART WAYS. 375 Park Avenue Spirits and International Beverage Holdings LTD, announced they will be parting ways. The companies began working together in August 2015 shortly after 375 Avenue Spirits joined Sazerac as an independent, and fully integrated sales company. With this departure, 375 Park Avenue Spirits will no longer represent the International Beverage Holdings spirit portfolio. The transition is underway and expected to be finalized by June 1.

GARRISON BROTHERS DISTILLERY RELEASES BALMORHEA 2020. Texas-based Garrison Brothers Distillery announced the limited-release of Balmorhea 2020. The whiskey was first released in 2018, and that initial release raised over $250,000 to help keep Balmorhea State Park open. The third release of Balmorhea is aged four years in new American white oak barrels, then transferred to a second new American white oak barrel and aged for another year, and then bottled at 115 proof. 6,000 bottles were produced. 504 bottles will be available at the distillery on May 22 for $160, and the rest will be distributed to select liquor stores, bars and restaurants throughout Texas and the rest of the Garrison Bros. footprint starting May 25.

Until tomorrow,
Sarah

“One mistake will never kill you. The same mistake over and over will.” – Harvey Mackay

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