Remy Cointreau share price: is Remy Martin’s owner a bargain?

Remy Cointreau (EPA: RCO) share price has sold-off in the past few years as it continued to underperform its top competitors. It has slumped by over 40% in the past 12 months, lagging behind its top peers like Campari, Brown-Forman, and Pernard Rickard. 

This performance has continued this year as it dropped by over 20% while Campari and Pernod Ricard have dropped by less than 10%. Brown-Forman has slumped by over 10%, as shown below.

Remy Cointreau vs Campari vs Pernod Ricard vs Brown-Forman

Remy Cointreau is one of the biggest players in luxury alcoholic brands industry. Its brands include some of the best-performing brands in the industry like Remy Martin, LOUIS XIII, Metaxa, Mount Gay, and The Botanist.

Remy Cointreau share price has come under intense pressure in the past few years, making it one of the worst performers in the CAC 40 index. It has plunged from a high of €208.4 in 2022 to the current €90.

Its top companies have also tumbled. Campari, its Italian competitor, has fallen from €13.23 to €9.5 while Brown Forman has crashed from $78.6 to $48. In France, Pernod Ricard has crashed from €212 to €140.

The main reason for this performance is that these companies are no longer growing. In its recent annual report, Remy Cointreau said that its sales tumbled across its numerous brands.

Its Cognac division plunged by 29.2% to €778 million while its liqueurs & spirits revenue slumped by 7.4% to €387 million. In all, its total sales crashed by 22.9% to €1.19 billion. 

Notably, the company’s American business saw significant weakness as its sales dropped by almost 40%. That is happening as most Americans shun expensive brands like Remy Ma, Hennessey, Martell, and Courvoisier. 

Instead, customers are turning to other premium but less pricey brands that sell for between $100 and $200 per bottle. Some of Remy Cointreau’s brands go for over $3,000 a bottle.

Remy Cointreau has also been caught in the midst of the ongoing geopolitical tensions between Europe and China. Europe has started to investigate China’s EV companies for unfair subsidies. 

China, on the other hand, has targeted brands made by Remy Cointreau. If the crisis continues, there is a likelihood that the company will be hit by tariffs. Analysts hope that President Xi’s trip to France will help to alleviate these fears.

Remy Cointreau is also facing currency challenges as some currencies like the Chinese yuan and the Japanese yen retreat. In all, these currency fluctuations hit its profits by about €57.2 million in 2023.

On the positive side, the company is taking measures to stabilise its operations. It has slashed its expenses with the goal of achieving over €100 million in savings. Its valuation is also relatively cheap, opening the possibility of a turnaround.

The weekly chart shows that the RCO stock price has been in a strong bearish trend after peaking at €208.4 in 2022. It crashed below the key support at €148.8, the lower side of the head and shoulders pattern.

The stock has plunged below all moving averages. It has also formed a small descending triangle pattern, which is a popular bearish sign. Therefore, the outlook for the stock is bearish, with the next point to watch being at €74.95, its lowest swing in March 2020. In the long-term, however, the stock will likely bounce back as investors buy the dip. 

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