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Graft crackdown hits Rémy Cointreau bottom line

Image courtesy of Rémy CointreauParis-based Rémy Cointreau said Tuesday that sales of its Rémy Martin cognac slumped in China where the fight against corruption has hit consumption of luxury spirits.

Sales were down 9% overall in the first quarter of its financial year.

Rémy Cointreau said it launched a “Strategic Plan” to deal with the China slump.

It said it was “streamlining” on-trade contracts with wholesalers in China for its Rémy Martin brand and being cautious with wholesalers in Greater China.

President Xi Jinping imposed regulations in 2013 on government and party officials that mandate a “frugal working style.”

Those regulations — and waves of high-profile anti-graft investigations and prosecutions — have reduced public displays of extravagance, including drinking high-end booze at official banquets.

Other spirit makers have also been hit by slumping China sales.

Diageo, owner of Smirnoff and Johnnie Walker, reported a fall in sales of $411.5 million in China, Business Insider said.

LVMH, maker of Hennessy cognac, also said sales in China for the first quarter were down.

Rémy Cointreau said first quarter results were in line with forecasts. It confirmed expectations for full-year profit growth.

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Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.

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