For the better part of a decade, ultra-premium spirits appeared to ride an almost frictionless upward trajectory: consumers steadily traded up, new luxury drinkers emerged rapidly in key markets, and gifting & celebration occasions reliably pulled volume. In recent quarters that sense of uniform momentum has quietly begun to fracture.
Rémy Cointreau’s third-quarter sales update for fiscal 2025-26 provides one of the clearer snapshots yet of how that fracture is unfolding.
What Happened This Quarter
Organic sales declined 12% in the third quarter. The Cognac division, which still accounts for the lion’s share of group revenue, fell 17%. Asia-Pacific (largely driven by China) posted a steep double-digit drop, while the Americas showed only a low single-digit decline. Management confirmed continued de-stocking across most channels, though the pace eased slightly compared with the first half. CEO Eric Vallat described the environment as one of “normalisation after exceptional years” and stressed a continued focus on “selective distribution and brand equity protection”.
Why This Quarter Matters: The Three Growth Engines Are Losing Synchronisation
Three powerful tailwinds have propelled ultra-premium spirits since the mid-2010s:
- sustained price-mix improvement as consumers moved into higher price tiers
- rapid penetration of Western luxury spirits in fast-growing Asian markets
- robust demand from gifting and premium social occasions
The previous cycle derived much of its strength from the close synchronisation of these three forces.
These three forces are no longer pulling in close coordination.
Pricing power remains relatively resilient at the very top end (XO and above), yet broad-based trade-up momentum has clearly slowed in the VSOP-to-premium-XO corridor — the heart of the category’s volume-profit engine. Gifting, once an almost mechanical demand driver in several large markets, has become markedly more selective and occasion-dependent. Geographic contributions have also desynchronised: while certain developed markets and travel retail show signs of stabilisation, parts of Asia are still working through meaningful inventory and sentiment headwinds.
The result is not a uniform slowdown, but a growing misalignment in timing and intensity across price bands, usage occasions and regions. That lack of synchronisation matters more than any single quarterly percentage — and may be an early sign of more lasting shifts in certain segments.
Where the Divergence Is Most Visible
Rémy reported that the decline in Cognac was significantly steeper in the VSOP and premium segments than in the super-premium and prestige XO range, where volumes held up better.
Within the group, non-cognac brands (Cointreau, The Botanist, Mount Gay among others) again showed far more resilient trends, with aggregate organic growth in positive territory.
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Management noted that the US market, while still facing wholesaler inventory adjustment, recorded a meaningfully smaller decline than Asia-Pacific.
In contrast to the pronounced weakness in China’s gifting-led demand, travel retail displayed early signs of recovery in prestige cognac, albeit from a smaller base.
The pattern points to a deepening structural divergence across price, region and occasion.
What Management Is Signalling Through Language and Priorities
In earlier quarters the dominant language centred on “temporary headwinds” and “inventory correction”.
This quarter the tone continued its shift toward “normalisation” and “mid-cycle adjustment”. The repeated emphasis on “discipline”, “selectivity” and “long-term brand equity” suggests a more protracted timeframe is now contemplated.
Resource allocation priorities appear to have tilted, as reflected in the greater emphasis on margin discipline and selective investment in recent commentary.
Taken together, the evolution in wording and emphasis points to an acceptance that the next phase of growth will be slower, more uneven, and more dependent on deliberate execution than on category-wide tailwinds.
Three Takeaways for the Ultra-Premium Spirits Landscape
Ultra-premium spirits have entered a period in which the major growth drivers are no longer firing in unison — price tiers, usage occasions and geographic markets are moving at different speeds.
Looking forward, the brands and companies best positioned are likely to share at least two of the following characteristics:
- resilience across multiple price tiers and drinking occasions rather than dependence on a single ladder rung or ritual
- a more balanced geographic and portfolio footprint that reduces reliance on any one market or category
- stronger pricing discipline and channel control that can withstand periods of uneven demand
This appears to be a mid-cycle adjustment — albeit one that is revealing deeper fractures and divergences within the category. Still, the market is recalibrating its expectations for the depth, duration, and unevenness of this phase.
