REMY COINTREAU SAYS GOODBYE TO MAXXIUM J-V
Remy Cointreau (maker of Remy Martin cognac and Cointreau liqueur) announced plans last week to terminate its agreement with the Maxxium distribution joint-venture as of March 30, 2009, prompting shares to rise as much as 9% on Thanksgiving Day. Could the company be for sale?
Maxxium Worldwide is a distribution joint venture that operates in 34 countries outside the U.S., mostly in Europe and Asia. Partners include Beam Global Spirits & Wines, Edrington Group and V&S Group
In a brief statement, Remy said it hopes to find “alternative distribution options in priority markets such as Asia.”
A financial penalty for withdrawing from the alliance is likely to incur, with estimates as high as $320 million.
While the announcement has renewed takeover speculation (Brown-Forman, Fortune Brands, Bacardi and Constellation Brands are possible buyers), it could be quite possible that Remy is simply looking for partners more focused on premium and super-premium brands. Some analysts even pointed out that Remy’s departure could be a defense mechanism in case Fortune Brands acquires Absolut in the future.
But if there was ever a time to pull out, the time would be now. Cognac and other brown spirits are rapidly growing in Asia, and Remy accounts for a third of China's cognac market. The company may prefer to take advantage of this alone or at least with new partners.
Whatever the reason, Remy leaving Maxxium is not expected to significantly hurt the joint-venture. Tom Flocco, ceo of Beam Global Spirits & Wine, reassured the industry in a statement:
"We do not expect Remy Cointreau's eventual departure from Maxxium to have a material adverse impact on our results or those of our parent company, Fortune Brands. As Maxxium has indicated, the Maxxium partners have plenty of time to successfully manage the transition.”
It is also important to make note of the fact that Remy brands account for only about 15% of Maxxium’s case volume.
A spokesman for Edrington also agreed: "There will be no financial impact on us."
Maxxium Worldwide is a distribution joint venture that operates in 34 countries outside the U.S., mostly in Europe and Asia. Partners include Beam Global Spirits & Wines, Edrington Group and V&S Group
In a brief statement, Remy said it hopes to find “alternative distribution options in priority markets such as Asia.”
A financial penalty for withdrawing from the alliance is likely to incur, with estimates as high as $320 million.
While the announcement has renewed takeover speculation (Brown-Forman, Fortune Brands, Bacardi and Constellation Brands are possible buyers), it could be quite possible that Remy is simply looking for partners more focused on premium and super-premium brands. Some analysts even pointed out that Remy’s departure could be a defense mechanism in case Fortune Brands acquires Absolut in the future.
But if there was ever a time to pull out, the time would be now. Cognac and other brown spirits are rapidly growing in Asia, and Remy accounts for a third of China's cognac market. The company may prefer to take advantage of this alone or at least with new partners.
Whatever the reason, Remy leaving Maxxium is not expected to significantly hurt the joint-venture. Tom Flocco, ceo of Beam Global Spirits & Wine, reassured the industry in a statement:
"We do not expect Remy Cointreau's eventual departure from Maxxium to have a material adverse impact on our results or those of our parent company, Fortune Brands. As Maxxium has indicated, the Maxxium partners have plenty of time to successfully manage the transition.”
It is also important to make note of the fact that Remy brands account for only about 15% of Maxxium’s case volume.
A spokesman for Edrington also agreed: "There will be no financial impact on us."
posted at 3:08 PM
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