Rémy Cointreau SA (RCO) Earnings Call Transcript & Summary

Welcome to the Remy Cointreau 2026-2027 Second Quarter Sales Presentation. [Operator Instructions] Now I would hand over to Mr. Luca Marotta, Deputy CEO and CFO. Sir, please go ahead.

Hello, everyone. Welcome to our first half sales presentation. And as highlighted in our press release, Q2 sales grew by 4.2% organically, bringing H1 organic sales to plus 2.9%. This performance includes: first, a strong growth in Cognac of plus 12.4%, reflecting a significant acceleration in sales in APAC, particularly in China, and to a lesser extent, in EMEA. Meanwhile, sales in the Americas declined, impacted by a high base of comparison in the U.S. Second factor, a decline of minus 7.4% in Liqueurs & Spirits due to the destocking in the Americas following the transition as well from RNDC to Reyes in the U.S. In parallel, EMEA continued to show mixed performance, still weighed down by Europe, clearly inside EMEA despite a return to growth in a key states in a key country like the U.K. Specifically, Q2 sales performance breaks down as follows: a volume increase of plus 0.5% and a positive price/mix effect of 3.7%, largely driven by mix on the back on the heels of the strong outperformance of Cognac versus Liqueurs & Spirits. This performance is in line with our expected forecasted full year trajectory. Looking into the overall sales performance by region. Let's start with the Americas, where sales were down by 5.5% in the H1. Over the quarter, performance was impacted by a high base of comparison in Cognac and destocking in the U.S. due to changes on distribution in a very challenging market, still very challenging. APAC was up by 14.3% in H1, reflecting a strong acceleration in shipment in China in Q2 ahead of Mid-Autumn Festival and an ongoing continued momentum across the rest of Asia. EMEA was down by 2.2% in H1. This reflects different type of performance, strong performance in the AMEI region and a solid improvement in the U.K., but more than offset by subdued consumer environment in the rest of Europe. One last word on Global Travel Retail, which for us is a business unit spanning all 3 regions. Sales were up by very strong double digit in Q2, mostly driven by APAC and to a lesser extent, EMEA. Last year, the technical impact of duty-free disruption in China, you remember, was estimated EUR 2.2 million negative in Q2 and EUR 7.7 million in H1. Even excluding this comparable effect, this base effect, which is mathematically improving the performance, growth would have been remained in a strong, I repeat, strong double-digit. So a very positive quarter in H1 for Global Travel Retail. In terms of value depletion, best approximation of final sell-out for H1 at group level, all brands together. In the U.S., value depletion were close to flat with the Liqueurs & Spirits offsetting decline in Cognac. Volumes depletion were positive. So there is a negative impact in terms of volume value equation in terms of depletion in the U.S. We were particularly pleased with the exit rate of September, which reached double-digit growth. But as I will highlight later in the Q&A session, this is too early to consider that as a sustainable considering the strong month-to-month volatility that now we are even more than before witnessing. It's very important to look at figures at quarter level in terms of trends more than single months. However, September was very, very positive. In China, value depletion were up by mid-single digits in the H1, which represents very good performance considering the current market environment. However, despite a high single-digit growth in Q2, Mid-Autumn Festival depletion were below our internal expectation. I repeat internal expectation because H2 was a -- Q2 was a high single-digit growth performance in depletion and so below sell-in. Despite that, we gained market share in sell-in, depletion and retail sell-out during Mid-Autumn Festival. In EMEA, value depletion increased by low double-digit. And so overall, we can say the H1 group value depletion grew by mid- to high single-digit year-on-year, outperforming sell-in trends that were lower than the performance of depletion value. To conclude on this very first slide, we are reconfirming our full year guidance even if the underlying assumption related to tariffs and ForEx have been updated, and I will provide more details at the end of presentation to let you understand where these new flows goes into. Now Slide #3. H1 sales amounted to EUR 510.9 million, representing an increase of EUR 21.3 million, or plus 4.4% on a reported basis. This performance was shaped by the following factors: an organic growth of EUR 14.1 million, which means plus 2.9%. This performance is split between a negative effect of minus 0.4% in volume and a positive price/mix of 3.3%. Price/mix positive effect is in reality, totally driven by strong positive mix linked to the outperformance of Cognac. Second, a positive -- there was a change in the dynamics of ForEx, currency translation impact of EUR 7.2 million, or 1.5% gain, marking a clear shift in trends compared with the previous quarter. Of course, it is a bit early to know whether this is sustainable given the volatile macro environment. But this gain were mainly driven so far by the appreciation of the Chinese RMB, which contributed for around EUR 8 million, EUR 7.8 million to be precise, while the U.S. dollar, even if improving, still had a slight negative impact of minus EUR 1 million. Now let's now turn to Slide #4 to look more closely to the organic trends by region at group level, all brands mixed together. Let's start with the biggest one, consider the figures, which is APAC, in which organic sales were up by 14.3% in H1. Let's start with the volume value equation in sell-in. This performance was driven by a positive volume effect. Inside APAC, clearly, China is the most important one countries in which sales were up by mid-teens in the Q2, in line with the expectation. While Q2, I insist, were very positive, improving sequentially compared to the Q1, market conditions remained challenging with Mid-Autumn Festival depletion below our internal expectation, which were very, very high. Overall, H1 value depletion in China were up by mid-single-digit, but I repeat, with an acceleration to high single digits in the last quarter. Given the equation -- mathematical equation, sell-in and value depletion in H1, inventory levels in China at the end of September were slightly higher than at the end of June, which will create the need for a measured destocking in Q3 ahead of Chinese New Year as our overriding priority is to maintain healthy inventory levels in China. We are talking, I repeat, for a very measured destocking and this equation needs for this area aligned more in absolute level than in weeks of coverage. So we did not explore the stock after Mid-Autumn Festival at the end of September, Festival sell-in campaign at the end of September. So the destocking needs is measured, I repeat. Elsewhere in the region, the rest of Asia recorded very strong double-digit growth in Q2, driven by Cognac and to a lesser extent Liqueurs & Spirits. And finally, as already globally highlighted, GTR related to APAC region was up by strong double-digit, even stripping out the technical effect of last year. End of September, APAC region accounted for 44% of group sales, up 5 points compared with the prior year. Let's now turn to the Americas, in which organic sales were down by 5.5% in H1. This performance reflects a mid-single-digit decline in volume and slight growth in price/mix in sell-in, mostly driven by mix. In the U.S. specifically, sales declined by low double-digit in the Q2, impacted by a very high base of comparison in Cognac and some destocking following also clearly some mechanical change linked to the change of distribution. In parallel, in depletion, H1 value depletion continued to improve sequentially, and we were close to flat at the end of September. This is very encouraging, even more if you consider the exit rate at the end of September, but we are not there yet, because as I explained, volatility is increasing, technical factor are overwhelming compared also to the underlying sometimes. So we need to be very cold to define what is a spark and how much of this spark is sustainable. But at least, there was a strong spark. There was a fire. It was not so cold like before. Inside that, in term of dynamics of states, control states, which account for more or less 20% of our total value depletion are now in growth, which is very important. Control states are less impacted by sell-in, sell-out stock dynamics because they are more lean in term of stock, while in term of mechanism of stock. While open states accounting for 80% are close to flat with a solid performance depletion-wise of Liqueurs & Spirits offsetting the decline in Cognac. In this context, inventory levels in the U.S. stood more or less at the same 4 months at the end of September with a slight change of asymmetry between Cognac and Liqueurs & Spirits, less in Spirits, a bit more in Cognac before the dynamics of sell-in compared to sell-out. Canada. Canada sales were down, so negative by low double-digit in Q2, impacted by continued destocking. In parallel, in LatAm, sales were up very strong double-digit in the quarter, mostly driven by Cognac. One last word on GTR Americas, which were slightly up in terms of performance. Here, our footprint is very small so far and the potential is, therefore, very, very important for the future. End of September, the Americas accounted for 35% of our group sales, down 4 points compared to the previous year. Finally, EMEA. EMEA region in which organic sales were down by 2.2%, primarily reflecting a negative volume effect and a positive price/mix, essentially mix, as I highlighted for everybody more or less. Inside that, by subclusters, performance were very differentiated. Within Europe, third-party distributor sales were down by high teens in Q2, mostly impacted by Germany and Poland, where consumption is weak, promotional activity is high. Some news concerning the excise in Germany are not going in the right direction, mathematically speaking, for our sales. So it will be a complicated not only H1, but year for Germany and Poland and for the subcluster inside Europe. In the U.K. and Nordics, sales were up by mid- to high single-digit quarter, accelerating from Q1, mostly driven by a very important market like the U.K. After a touch of positive -- a touch of negative, Benelux and France sales were down sharply in the quarter, affected by the discontinuation of Partner Brands distribution in the Benelux from April onwards. You remember, we discontinued the cooperation with the William Grant brands. However, excluding nongroup brands, sales would have been up. France was down indeed by low single-digit. There is no nongroup brands history to highlight there. So it is a negative performance by low single-digit in France in the H1. Lastly, AMEI and CIS sales were up. So now positive again, but very strong double digit in the quarter, led by South Africa and partially also by UAE. The conflict in Middle East had a slight negative impact on the region, but still we will -- we grew compared to the previous year. This was sell-in. Overall, H1 by depletion were up by low double-digit. As a consequence, inventory levels remained more or less unchanged compared to the Q1. And finally, GTR EMEA was up strong double-digit. End of September, EMEA region accounted for 21% of group sales, down 1 point compared to the previous year. Now let's now turn to Slide #5 to talk about the analysis by division. Let's start by the queen, which is Cognac. Cognac division posted an organic sales growth of plus 10.3% in H1, driven by a 16% increase in volume and a negative price/mix of minus 5.7%, mostly affected, in this case, clearly by the price effect. End of September, Cognac accounted for 66% of our sales, so increasing its weight overall of 5 points. Inside Cognac, let's start with APAC, and let's start with China. Cognac sales in China were, as expected, positive, up by mid-teens in the quarter, which means high single-digit growth in H1 in a still challenging market. The performance was mainly driven in terms of channel by direct channels, while indirect wholesale channel strongly underperformed compared to the weighted average. Does it mean it's negative? No, it's not. So when I talk in terms of underperform, overperform, it's always the meaning compared to the average performance and sometimes with our expectation, but we precise that, okay? Otherwise, I will tell negative versus previous year. E-commerce was up by more than 30%, 3-0, accounting for 30%, 3-0, of weight of sales in Q2. Looking at the performance by brands, not by channel, Remy Club continued to grow, and the quarter witnessed a particularly strong performance for Louis XIII as well as a meaningful acceleration in Remy XO. Finally, sales in Hainan, Hong Kong, Taiwan and Macau were all strongly up in the quarter. This was sell-in shipment top line. Now let's look at the other parts of the moon. So by depletion H1 were up by mid-single-digit, including a growth of high single digits in the quarter. So there's an acceleration in the quarter in Cognac depletion in China, mostly driven in that case, clearly by Hainan, Hong Kong and Macau. Louis XIII and to a lesser extent, Remy VSOP led this performance, while at the same time, Remy Club continued to be resilient. These result are positive, but clearly reflect a touch softer Mid-Autumn Festival below our internal expectation, which will require a very measured realignment between sell-in and sell-out in the last quarter. Despite that, at the end of the Mid-Autumn Festival, we gained market share compared to competition during Mid-Autumn Festival, doing a performance that we can clarify comparatively better than our peers. In rest of Asia, sales were up by very strong double-digit in Q2, mostly driven by Remy XO and Remy VSOP. This was APAC. In the Americas, let's start with North Americas, sales were down by low double digits in the quarter, impacted by high base of comparison and some destocking, clearly, particularly in Canada, as highlighted, mathematically speaking. Q2 U.S. value depletions were down by low single-digit, low to mid in H1. So what does it mean? That value depletion in the U.S. are improving sequentially from the previous quarter and period, driven by very strong performance on Louis XIII, for instance, as well as sequential improvement of Remy Martin VSOP. 12 months rolling value depletion included a positive 1 point of price/mix at the end of September year-on-year. In Latin America, sales were up by triple digits in the quarter, albeit for a very marginal basis, led by Remy VSOP, Remy XO and to a lesser extent, Louis XIII. And then last but not least, inside Cognac, EMEA sales grew by very strong double digits. What happens? U.K. and Nordics were flat in the quarter, led by the U.K., which returned to growth and benefited very strong sell-out as well, so quite healthy. Europe third-party distributor cluster was down by low double-digit in the quarter, most impacted by Germany. It will be a less motive of the year. So AMEI and CIS were up by very strong double digits, boosted by South Africa, supported also by the continued success of Remy Very Special, VS and the UAE. And finally, Benelux and France were up by very strong double digits ahead of the transition also to the new -- 2 new distributors that we named in October 1 in Benelux, one for Belgium, one for the Netherlands. Lastly, EMEA Cognac value depletion were up by very strong double digits in both quarter 2 and H1. Now let's turn to the Liqueurs & Spirits division, Slide #6. This division reported an organic sales of minus 7% in H1, mostly driven by lower volumes. At the end of September, Liqueurs & Spirits accounted for 33% of our sales, down 4 points compared to last year. Let's review the division performance by region. And let's start with the Americas with North America sales were down by low double digits in the quarter, impacted by some destocking in the U.S. However, Q2 U.S. value depletion continued to display solid growth at low single digits, low to mid in H1, led by all key brands, Cointreau, Mount Gay and The Botanist. So that's the reason why the stock realignment and the stock equation is less of a potential issue for the distributor in Liqueurs & Spirits compared to Cognac, and we are still at the same 4 months overall. Additionally, price/mix for Cointreau was negative of minus 2 points over the 12 months period ending September being a mix of price aggressive, which has been reduced compared to the past, but even more by the format and SKU mix. In Latin America, sales were up by high single-digit in the quarter, supported by strong performance of Cointreau. Second region by weight of Liqueurs & Spirits is EMEA. Sales were down by mid- to high single-digit in the quarter. U.K. and Nordics up by single-digit, driven by strong growth in the U.K., also thanks to some new distribution gains and a solid innovation pipeline, including Cointreau Spicy and Mount Gay Spiced. So the spice, it is something that we are trying to push to be a new wave of innovation given solid top line and contribution to our growth for the future everywhere in the world. Europe third-party distributor was down by strong double-digit, once again, Germany and Poland. Benelux and France were up by low single-digit, benefiting also partially by the change in distribution in Benelux, while AMEI & CIS was more or less flat, in that case, more than compared to Cognac affected by conflict in Middle East and some on-trade impact as most of our footprint for the on-premises is clearly touched. In parallel, EMEA Q2 value depletion in Liqueurs & Spirits were up by low single-digit, but down low single-digit in H1. And then the last one in terms of weight, 14% is APAC, in such, in APAC, China. In China, sales were down by mid- to high single-digit in Q2, affected by Cointreau, which faces high promotional competition, while whiskey was up strong double-digit in the same period. This was sell-in. In terms of value depletion, we're down by high teens in H1, but highlighting a strong improvement in the second quarter for whiskey, which are now back to growth. Rest of Asia, for Liqueurs & Spirits was up by low to mid in the quarter, mostly driven by Japan, where Bruichladdich still continue to enjoy good momentum, particularly Octomore, and as Telmont is doing, while Australia as a country continue to face tough market condition. One word on nongroup brands which represent today less than 1% of group sales and were down by 1 point in ratio compared to the previous year. Clearly, there is the Benelux part that disappeared. They recorded an organic decline of minus 62%, 62.5% in the H1, mostly affected, as I said, by Benelux following the discontinuation of the William Grant Partner Brands distribution from April onwards. Let me now turn to the last slide, #7. In a nutshell, our organic guidance is unchanged. We expect a return to organic sales growth for the year. And we expect operating profit margin organically to improve slightly net of tariff. However, the underlying assumption has been updated. First, we have reduced the expected total tariff impact from EUR 20 million to EUR 5 million. Why that? Now we expect -- we forecast no impact in the U.S. and unchanged EUR 5 million impact for the price undertaking put in place last year in China. This mainly reflects a reduction in the U.S. tariff rate on European imports from 15% to 10% as well as EUR 6.4 million in tariff refunds recognized and already received in H1. The second point, we already started in H1, we decided to reinvest the reduction in the expected tariff impact of EUR 15 million in the business to continue to fuel the growth to improve the top line and to increase the dynamic momentum of the company. I'll be back on Q&A on that point, but now it is the fourth growing quarter of the company. And on 12 months rolling basis, we are running in sell-in more or less at plus 4%, a touch more than plus 4%. And the same extent in depletion. So okay, we did not recover compared to the '22, '23. But in this context, we are a company growing four quarter in a row, and we are granting plus 4% top line and depletion. So not to be rocket rolling on that and dancing, but quite satisfied. On FX, ForEx, given the favorable -- very favorable evolution in the RMB and U.S. dollar, we now expect a positive impact of around EUR 50 million on sales, equally split between H1, H2 and now a positive impact, I repeat, positive on operating profit and published rate between EUR 3 million and EUR 5 million, with most of the impact expected in H1. At the same time, disciplined capital allocation remain a key priority, notably through tight management of inventories and capital expenditure. Finally, maintaining our debt ratio below 3.5 at the end of the year, this fiscal year, March 2027. It is a key commitment for the group. Of course, this target set last June, as you remember, exclude the favorable impact of the hybrid issue completed at the end of September. As you know, the hybrid bond is fully recognized as equity, which should enable us to achieve a better A ratio at the end of the year, but the guidance is not surfing on that with something will be on top. And the hybrid bond has been announced end of September, but will not impact the H1 figures because we are recognized in terms of cash in the 7th of October. Thank you for your attention, and now we are happy to answer to your question.

[Operator Instructions] We are now going to proceed with our first question. And the questions come from the line of Simon Hales from Citi.

So I wonder if we could go back to Mid-Autumn Festival and your comments there. Could you provide a bit more color on what you actually saw from a trading perspective, both within Remy and for the broader industry through Mid-Autumn Festival itself. I think you talked about you having very high internal expectations for what you saw, which you weren't able to sort of meet. And then you also talked about a measured destock, I think, in China in Q3 to get inventory levels back to more sensible -- a more sensible place. How should we interpret that? I mean how big is measured destock to come in Q3, Luca?

Thank you for your question. So I will try to start with the first one. Our performance in China were positive compared to the last year, both in sell-in and in depletion. Even more if you include our peers, Hainan, Macau, Hong Kong and on top of China Mainland performance. Mid-Autumn Festival has not been the Mid-Autumn Festival of the century for anybody. So we set very high expectation forecast. And our satisfaction considering the challenging market, the promotional activity, which is very, very present there, consider quite successful, even if we put a little bit more sell-in compared to the best estimation of the final sell-out. Depletion were positive, but depletion clearly are representing Tier 1 to Tier 2 and then you have to go to Tier 3, you have to go to retail. There is a long, long route to market in China to follow. So we have to take that into account. So in term of dynamics of Mid-Autumn Festival, satisfaction, gaining market share, clearly even more on China Mainland compared to Hainan compared to our peers, if I may, without -- our performance relatively speaking in China Mainland was more solid and in other peers in non-China Mainland will be a little bit more hammering compared to us in terms of dynamics, Hainan and Hong Kong. But also, we -- as well, we profit on that dynamics, but in a lower proportion. So this strong positive sell-in and very positive single-digit sell-out of best approximation calls for some cautiousness inside the Q3. But the Q3, if you allow me, needs to be analyzed a bit more globally in terms of dynamics of the company. So what do we expect? Because you know the Q2, and you know the H1, plus 4%, plus 2.9%. This is too early to guide, but we expect at group level, not only China, a Q3 sales top line to slow down compared to the H1. Why that? Because of China? No. First, negative compounders will be or should be because clearly, we are always forecasting and nobody has a crystal ball to -- it is EMEA. EMEA will continue to be particularly tough, impacted Germany, Poland, other big countries, which are challenging for several months. There's a problem of promotional activity or lack of consumption. And even if there is an excise tax increase in January 1, the ecosystem is so globally depressed with nobody industry is betting on a high last bite effect on the Q3 top line preordering. So the first reason of this Q3 sales to slow down, at the end will qualify that, don't worry, compared to the H1, it is not China, it's Europe. The second one, which is a moderate one, it is China. They will face some in absolute value destocking ahead of Chinese New Year, considering a softer-than-expected level of final retail and so depletion in terms of pull effect and push during MAF versus our internal expectation. I don't want to qualify that in million euro, but we are clearly talking for a very measured in absolute value impact of destocking. But in Q3, China in terms of sell-in probably will be negative, less negative than EMEA. It is not the first compound. In parallel, Q3 will be clearly influenced by positive compounders. U.S. should be back to growth following the normalization of the distribution transition, the fact that even if we are not yet there yet, but overall, month after month, the sparks and we are adding on weighted average, some more solid sell-out data and no additional imported destocking is expected in the quarter. And clearly, what we will be the engine of the Q3, the positive compounders, rest of Asia, GTR, emerging market. GTR all over. And also, we should start to see some improvement in Americas as well. In a nutshell, so this is a point what you want to know at the end, at group level, we expect Q3 to be more or less flat versus last year, so no negative, flat, AND Q4 to reaccelerate. Inside that, China will be delivering probably a top line negative impact to in a very measured way, realign in absolute value sell-in stock. We didn't inject a bomb of sell-in at the end of Q2 that now need to be digested with minus EUR 30 million, EUR 40 million. We are very far from that. I hope to have been clear and exhaustive.

We are now going to proceed with our next question. And the questions come from the line of Edward Mundy from Jefferies.

Luca, so 2 questions from me, please. The first is around sparks. And you pointed to the improvement in depletion trends in both China and U.S. in Q2. As we think about the sustainability of this inflection, how much do you think this is due to a better underlying market? And how much do you think this is due to a shift in your strategy? That's my first question. And then the second question is on this change in the tariff burden that's quite meaningful. And how should we think about this within the context of the RC Forward plan. It's worth about 1.5% on A&P roughly. And therefore, are there things that you may not have been able to do from an activation standpoint, but you now can do that should help this RC Forward plan? Or is this more about giving more confidence in the profit drop?

Okay. So let me try to answer to your question. I will start with the second one. If I understood correctly the question because they're quite a bit disturbed. So RC Forward is meant to be not the strategic weapon of the company, but something that will help the company to conquer the strategic objective will be more clear detailed on the 25th of November. It is a sales conference, so I cannot enter in all the details in term of the profit dynamics. But 2 or 3 things I can say is -- are, not is, are: first of all, benefit, the EUR 100 million that before reinvesting act we highlighted will be more skewed to next fiscal year and the third one. So this year will be more or less 10% of the savings that we are expecting that will contribute theoretically to the operating profit of the year. But also on top, there was the good news of the tariffs, change of some refund, change of rate. So we were faced to 3 different type of dynamics: a program which is installed, some good news, a positive free cash flow tension that has been installed as a new milestone of the company has always been -- was more a consequence of some type of strategy. And now it is part of the strategy as well, so free cash flow tension. And the good news. So there was the decision by our CEO to focus on top line dynamics and we are bearing some fruits to reinvest in liqueur right now straight away without thinking too much, without centralizing. And if you consider that the delta is more or less EUR 10 million in the H1 because the EUR 6.4 million refunds and we consider that the EUR 7 million because EUR 8 million and EUR 7 million comes EUR 15 million, which is the delta between 15% and 10%. We can say that EUR 10 million would have been affected the H1 bottom line has already been reinvested. So don't grow your estimation on consensus. Why? Because some of that is already in the top line, okay? Why that? We reinvest that EUR 4 million, and you see that in price, promotion, top line dynamics. More or less EUR 1 million is not invested. It's called by the Middle East war, more or less EUR 2 million in A&P and brand equity support initiatives, even if A&P it will be more skewed to the H2 than the H1 because we have to preserve our bullet for the OND and Chinese New Year and more or less EUR 3 million of injection of strategic OpEx. So we are already getting some gains more from the tariff part and some from the RC Forward dynamics and reinjecting that on the business. And that's the reason why our internal expectation as in China are particularly high compared to the previous period. Second point, sparks depletion rate, what is sustainable or not. Clearly, let's start with the U.S. Things are going better, but we are not there yet. Market is still very complicated. And if you want to look at the negative side of the moon in U.S., you have a lot of argument to continue to sustain this theory. But sparks are not only in the figures, are also in some consideration on 12 months rolling. If you consider, for instance, the performance of 12-month rolling is much more driven by Cognac than Liqueurs & Spirits in both, also in depletion. So it means that the dynamism is there more than we expected. September exit rate was influenced by some technical factors way. Labor Day was some days of changes of the fact that the national chains need to be delivered before OND and comparatory were increasing their footprint, change of distribution sometimes are negative, sometimes can give some disruption in a positive way. So I don't think that the double-digit rate of September, I hope to be wrong, I don't think that will be replicated in October. Then we'll touch base on the exit on the current trading of at group level, so you can have a brighter idea. But we are improving. Probably at the beginning of the year, we were too optimistic in terms of the phasing of this improving. At the end, we'll be ending being more on short in term of our estimation that with compared to the realization, but things are improving. In China, I give you only one figure. October depletion are positive, okay? It says it all. October depletion trends are positive in China in value and volume. So I don't know, probably maybe we are putting a lot of pressure in term of estimation because we are investing a lot as well, potentially be a little bit disappointing compared to our internal estimation, but dynamism in top line is really there. And the underlying in both should drive to positive figures even if with different phasing, even more volatile in a positive, negative way in China compared to the U.S. What's happened so far in current trading at group level in terms of sell-in and value depletion. So something that doesn't need to be -- to become an EBIT because otherwise, you have to spoil. But in this moment, it's important to give you some clarity. In sell-in in October is in line with our expectation, and we are growing. And by depletion, we don't have final data yet, but mathematically compounders and worked on spreadsheet figures are showing that U.S. is clearly in a negative dynamism compared to September because we have -- there is a technical factor Labor Day. EMEA remained contrast with some negative in Germany and Poland. But at the same time, U.K., South Africa and other major country of Europe are positive on depletion, which is something very important for us because at the end, one day or the other, the equation should reverse. China, I repeat, is growing. October is growing depletion in volume and value. So the destocking topics of the Q3, touching basis might be also a little bit reversed with an increase of destocking in the first month of the quarter. GTR, rest of Asia, emerging markets, I touch wood, but so far, very good. A lot of pressure about Franck Marilly, our CEO on this new territory is right. And if pressure bear fruits, we are seeing the result of this order because it is clearly what we witnessed so far.

We are now going to proceed with our next question. And the questions come from the line of Laurence Whyatt from Barclays.

A couple of questions from me, please. Firstly, just on your different Cognac SKUs. I was wondering if you can just give us a bit more information on which ones are performing particularly well, which ones are struggling a little bit with the destocking during the Chinese New Year period. I think from your comments earlier, you've done pretty well with the Louis XIII and the VSOP products in China. Club look like it did all right. Can we then assume that the destocking is largely coming from XO? And then similarly, you mentioned that Louis XIII is doing particularly well. You highlighted it in China and the U.S. I'm just wondering if there's anything specific that's driving that improvement in that important brand. And then secondly, in your U.S. business, of course, we've seen a bit more new products from your peer set in the sort of cognac ready-to-drink space. And Remy has talked about introducing new products in the U.S. And I was wondering if there's been any development on that, if there's anything you can share with regard to how you're thinking about new products within the U.S. market?