Rémy Cointreau: China's Cognac Industry & Distribution

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Could we start at a high level and then delve deeper into more details? Could you provide an overview of the Cognac category in China and its historical and cultural influences? You mentioned Hong Kong, which is a Western influence. Cognac, at its core, is rooted in the heritage of the Cognac region in France. Could you discuss the historical development of Cognac in China?

In the southern part of China, particularly the Guangdong province, the habit of drinking Cognac during meals began in the 1980s and 1990s, especially among those born in the 1960s. Meal occasions are the most important for spirits consumption in China. In the northern and central parts of China, Cognac consumption is mainly concentrated in on-premises locations, such as nightclubs and nightlife venues. In the southern and eastern parts, like the Fujian and Guangdong provinces, about 60% of Cognac consumption occurs during meal occasions through the off-trade channel. The remaining 40% is in on-premises locations. The Guangdong province alone accounts for about 60% of the overall Cognac market volume in China, and the Fujian province makes up about 15%. The rest is split between other key cities like Beijing and Shanghai, and to the west, Chengdu, where consumption is mainly on-premises.

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Yes, the overall market, as well as data between different provinces. Is there a significant difference in market shares due to an overweighting of on-trade or brand perception?

I'll start with the southern market, which we identify as a stronghold. In southern China, Martell holds roughly 55% of the market share. Hennessy and Rémy split the remaining 45%, with Rémy focusing more on off-trade. Hennessy has a healthier split between on and off-trades. If you project that across China, we have dominance in the north, but that's a small volume. In the west, we're dominant, and in the east, while in central China, it's a fair split between Martell and Hennessy, with Martell slightly larger. Overall, in China, Martell makes up about 60% of the Cognac market share. Hennessy and Rémy split the remaining 40%, with Hennessy slightly larger due to its on-trade presence.

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You mentioned the strengths for Martell being the sales force and for Hennessy being the marketing and brand power. Where does Rémy fit into that spectrum, and how is Rémy adapting to your last point? You said they're catching up.

Rémy has been growing their market share very quickly over the past four years in the stronghold market, which is the southern region. This is partly due to their well-established brand called the Club. The Club was one of the first Cognacs introduced to China through Hong Kong, gaining high recognition among Cognac drinkers with purchasing power back in the 80s.

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