The maker of Remy Martin cognac and Cointreau liqueur reported a 15.6% decline in organic sales during the quarter, compared to the 13.6% drop anticipated by analysts. The company left its full-year guidance unchanged.
Remy had already warned that its first half was likely to be tough amid ongoing problems in the United States and the slowing economy in China - its two key cognac markets. Cognac makes up around 70% of Remy's sales.
However, the cognac division's 12.2% organic sales decline was well ahead of analyst expectations, but its liqueurs and spirits division saw a 20.4% organic sales fall, more than double that forecast by analysts.
All spirits makers are experiencing a sharp slowdown in sales after a post-pandemic boom, when cash-flush consumers splashed out on pricey liquor and producers raised prices.
But Remy has endured deeper problems in the United States, where demand for its cognac has slowed, retailers and wholesalers have been cutting back on its stock and competitors are offering aggressive promotions.
These trends continued to take a "heavy toll" on its cognac business, Remy said, but also hit the liqueurs and spirits division harder than they had before. The unit houses brands such as Cointreau, The Botanist gin and Bruichladdich whisky.
Remy said the unit was also hurt by a "sharp fall" in sales in Europe amid high inflation and more promotions from rivals, a downturn in demand in Southeast Asia and whisky destocking in China.
At the group level, Remy described the Chinese market as "sluggish". It had enjoyed a surprise uptick in cognac sales there in the fourth quarter of last year, but executives warned that might not last.
Its Asia Pacific sales overall were down slightly, it said.
