What is the anticipated pass‑through of the tariff cost to U.S. consumers and how will it impact the company's gross margins?

Pass‑through expectation and margin impact

Rémy Cointreau’s management has indicated that, with the final 15 % ad‑valorem duty (down from the 30 % that was originally floated), it plans to pass roughly half to two‑thirds of the tariff cost on to U.S. consumers. In practice this translates into an effective price uplift of about 7–10 % on the affected European wine and spirit SKUs. Because the company can absorb a portion of the duty through existing pricing flexibility and the still‑robust “technical” rebound in U.S. sales, the net hit to gross margin is modest – roughly a 5‑10 bp compression for FY 2025‑26 versus the prior‑year baseline.

Trading implications

The limited margin erosion, combined with the firm’s mid‑single‑digit organic growth target and a strong U.S. rebound, means the stock should remain relatively insulated from the tariff shock. Investors may price in a slight upside if the pass‑through is higher than management’s midpoint, as it would preserve margin and support earnings. Conversely, a weaker pass‑through (e.g., <40 %) could pressure margins and trigger a modest pull‑back. In the short term, look for the share to trade near its current valuation multiples, with upside potential if the earnings guidance is reaffirmed or upgraded after the first quarter of 2025 when the tariff impact can be quantified more precisely. Keep an eye on U.S. volume trends and any further regulatory adjustments that could alter the cost‑pass‑through dynamics.