INTERVIEWDU DIRECTEUR GÉNÉRAL

ÉRIC VALLAT

This highly unusual year revealed the Group’s solidity,
the commitment of our teams, and the structural
integrity of our future-oriented brands.

You served as Chief Executive Officer of the House of Rémy Martin from 2014 to 2018, and you returned as Group Chief Executive Officer in December 2019. What are your impressions since your return?

What struck me most upon my arrival was the great importance, energy and enthusiasm dedicated to the Group’s corporate social responsibility. We stand out by virtue of our deep commitment to our terroirs. We are responsible for protecting them for future generations. By taking care of our heritage and our land, our sights are firmly set on the future.

Beyond our terroirs, the focus is no longer solely on the organoleptic qualities of our products and their price positioning, but also on their carbon footprint. We have ambitious targets in this area, driven by results that are already apparent.

I was also struck by the development and professional growth of our Chinese subsidiary, which in three years has developed a truly impressive organisation, with new and effective business management tools.

2019/2020 was a singular year for the Group. What is your analysis?

The year was marked by an especially complex macroeconomic environment. I am referring to the political crisis in Hong Kong, of course, but also to the application of import duties on some spirits categories in the United States, in the autumn of 2019. These external factors went together with the restructuring of our distribution network in Europe, which will have a positive impact in the long term despite being detrimental in the short term. Lastly, the final quarter of the year was marked by the health crisis, which started in January 2020 in China before spreading across the rest of the world, forcing us to close for the first time and simultaneously all our distilleries and bottling sites, from Cognac to Barbados.

These headwinds allowed us to become more agile and to instil our values ("Terroirs, People, Time and Exception") with even more meaning. I commend everyone’s commitment, which made it possible to promptly reduce our costs and maintain our teams around the world without relying on government subsidies. Because the Rémy Cointreau men and women are our greatest asset, and the time to prepare for the future is now.

You announced a new strategic plan for the Group, with 10-year goals. Why 10 years?

There are at least three fundamental reasons for this decision. The first involves the ageing time required to make our products. When we purchase eaux-de-vie  for our cognacs, for example, we think in terms of 10 years, sometimes 20, and even 100 years for Louis XIII! In that respect, 10 years is our natural horizon.

Moreover, an ambitious plan requires ambitious goals. But we know there is no single, clearly laid-out path to achieve them. We have to allow for questioning, test phases, changes to the organisational model, in short. And that requires more than 5 years.

Lastly, to develop a real strategic vision, you need to break free from the budget. But a five-year plan is likely to merely extend it. It would not be as ambitious, and it would be less disruptive. Our aspiration to become the leader in exceptional spirits must prompt us to rethink our profession to reach out to our clients.

The Group expects a gross margin of 72% and an operating margin of 33% by 2030. What are the main drivers to achieve these targets?

The short answer is that I see four lines of development to increase the Group’s profitability in the next 10 years. Firstly, setting goals for each brand in our portfolio, and thereby allocating our investments in a more targeted and effective manner to maximise the Group’s growth and profitability. The second line consists of reaching out to our clients to find out more about them and engage in direct dialogue with them where possible. One of our goals is to achieve 20% of our revenue through e-commerce within 10 years. Thirdly, the Liqueurs and Spirits division includes a few promising gems with great growth potential, that we will increasingly focus on. All of this while implementing a responsible growth plan that spans more than the environment. That plan is the fourth driver I would like to mention, because the values we uphold will play an increasingly important role in motivating our teams and clients around the world.

You mentioned that this growth should certainly be profitable, but also "responsible". What are the major challenges facing the Group in this regard?

We are fortunate to have "inherited" exceptional land. It is our duty to preserve this land for future generations. To that end, we have three very ambitious goals. As from 2025, all the agricultural raw materials used in our distilleries – from sugarcane plantations to orange groves – must follow a sustainable agriculture approach, as is already the case for our cognacs. Moreover, also for 2025, I would like 100% of our packaging to be eco-responsible. Lastly, we are committed to reducing our carbon generation in order to achieve a zero-carbon footprint in all our activities by 2050. Responsible growth reaches beyond the environment; it means growth that promotes diversity and inclusion. This also applies to our own teams. A committee has been created for this purpose, and will recommend practical measures in the next few months.

What inspires your confidence in 2020/2021 and the years ahead?

The year 2020/2021 will also be marked by Covid. We may lack visibility, but we are fully geared to get through this difficult period, and we will take all the measures that may prove necessary. But these short-term difficulties do not challenge our confidence in the future. What inspires my confidence? The commitment of our teams, our consistent and complementary brand portfolio (with some brands being 3 centuries old and others being 10-year-old start-ups), the quality and positioning of our spirits, and lastly, the authenticity of our values. Our structure is solid, and we have a roadmap to boot!