The press is reporting that Remy Cointreau SA has hired Credit Agricole-CIB to find a buyer for its Champagne division.
Remy’s Champagne unit, whose brands include Piper-Heidsieck and Charles Heidsieck, posted an operating loss of 4 million euros in the 12 months through March, the company said in June. Sales declined 24% in the period.
Remy Cointreau sold its secondary brands of Champagne in 2006, the group retaining only Piper-Heidsieck and Charles Heidsieck.
Exports of champagne in the group had fallen in 2009, pushing the group to take steps to try to restore the profitability of this activity, which represents 13.6% of its turnover.
In February, the house Piper-Heidsieck, owned by the group since 1988, had announced the removal of one quarter of its workforce, in Reims, citing a decline of 42% of its turnover since March 2009.
But sales of champagne group had recovered thereafter, increasing by 15.7% (+11.9% organic), thanks to France and Great Britain in the first half. Champagne Piper-Heidsieck operates 65 hectares of vineyards for production of 9 million bottles (80% for export). Its turnover in 2009 was 138 million euros.
Champagne has had its problems over the past couple of years and according to Euromonitor:
“Looking ahead manufacturers could hence continue enjoying the nascent recovery in the hope that the still lingering socio-economic obstacles will be overcome, signalling the ‘full sail ahead ‘for the industry.
However, according to Euromonitor International, global volume CAGR for the category over 2010-2015 should be expected to be anaemic at best, a fact that will continue taking a toll on profit margins and positioning.
Any possible upsurge is expected to be very limited, flirting with outright stagnation and postponed for the latter part of the next five year cycle. Diversification beyond its traditional bastions of the western world and into still burgeoning emerging markets will increasingly surface as a necessary choice for Champagne; After all, it works wonders for Cognac.”
As far as the still burgeoning emerging markets ie China are concerned Moët & Chandon and Veuve Clicquot probably account for two-thirds or more of all the volume consumed there which doesn’t leave much for the remaining brands.
However Telford International, sole Hong Kong distributors for Piper-Heidsieck and Charles Heidsieck, have said that strong marketing investment of the brands from Remy Cointreau has helped to develop the markets for its Champagnes. The colour red is very lucky in China and Piper-Heidsieck’s Brut NV attracts buyers for this reason.
However Remy Cointreau has another sparkling wine up its sleeve – the company established Dynasty Fine Wines as a joint venture in 1980 with Tianjin Development Holdings Ltd, in China.
Dynasty make a sparkling wine in the same method as Champagne made from Chardonnay and Italian Riesling grown in the coastal region of Tianjin and at Vinexpo Hong Kong this year they launched a Dynasty Muscat Sparkling Wine.
Dynasty has also opened a French style chateau in Tianjin. The mock classical structure echoes the Palace of Versailles, spans 11,000 square meters and features spires, battlements and marble statues that pay tribute to Dionysus, the Greek God of Wine.
Also sitting prominently at the front of the property is a glass and metallic structure styled after The Louvre in Paris. An underground museum beneath this striking pyramid explains the history of wine and wine making; from ancient Egypt, Greece and Rome to the most celebrated vineyards of France and the New World. Exhibits range from ancient wine urns and historic bottles to antique wine making equipment and tools.
The chateau itself is filled with Regency furnishings and antiques including historic tapestries, medieval suits of armour and an armchair owned by 16th century French author Michel de Montaigne. Elsewhere you’ll also find grand exhibition halls showcasing the world’s top vintages including priceless Remy Martin cognacs.
Dynasty’s Chairman and Executive Director Mr. Bai Zhisheng said: “Chateau Dynasty marks a significant milestone in our development, which also includes a huge expansion of production capacity.”
To put the company’s growth into perspective, last year Dynasty sold 57 million bottles of wine in China, a significant leap over the 100,000 bottles it sold in 1980, its first year of business. I wonder how many bottles of sparkling wine Dynasty will be selling in 20 years time?