Champagne brands for sale

Rémy Cointreau, the owner of Champagne brands Piper-Heidsieck and Charles Heidsieck, is putting the two brands on the block for sale to the highest bidder. It is estimated that the sale of the two brands could see a purchase price upwards of €450 million.

Rémy Cointreau BrandsIt was once thought that LVMH (Moet Hennessy Louis Vuitton), the luxury goods giant, would put in a bid for the brands, but that possibility was recently ruled out by chairman and CEO Mr. Bernard Arnault. That leaves Diageo and Pernod Ricard as potential winners of the bidding war. Some analysts predict that an outside private equity firm may also be the lucky buyer.

Crédit Agricole-CIB has been hired to facilitate the sales process, as the two brands have been unprofitable for nearly 20 years. This has confounded the Rémy Cointreau company, in part because of its successful operation of the Rémy Martin Cognac business. How can so much success in one side of the company fit with the losing operation of the Champagne brands?

Anne-Charlotte Amory (the president of Piper) had been struggling for many years to turn the brand around, even earning a respectable 10-12% earnings margin (before taxes) in 2008 before being wiped out by the economic crisis. While there has been some recovery recently, sales of the two brands dropped to under 7 million bottles in the year ended March 2010. Charles Heidsieck accounted for roughly 800,000 of those bottles with the rest coming from Piper Heidsieck.

Charles Camille Heidsieck Charles Camille Heidsieck (1820-1871) was a 19th century French Champagne merchant who founded the Champagne firm Charles Heidsieck in 1851. He is credited with popularizing Champagne in the United States and was known as “Champagne Charlie” during his stay. During the American Civil War Heidsieck was imprisoned under suspicion of being a spy for the French government and the Confederacy. His imprisonment sparked an international incident between France and US over what became known as The Heidsieck Incident.

Charles Heidsieck was the son of Charles-Henri Heidsieck, a Champagne merchant who was famous for riding into Moscow on a white stallion in 1811 just ahead of Napoleon’s advancing army.

The sale will proceed despite cost cutting measures that included job losses for roughly 25% of the workforce for the brands, which induced a strike at the company headquarters in Reims earlier in the year. A company spokesperson confirmed that, “the sale agreement will remain subject to the necessary information disclosure, consultation and authorization procedures, in accordance with current regulations.”



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