UPDATE 1-Remy Cointreau says China to weigh on Q3
* Q2 like-for-like sales fall 5.3 pct vs 2.3 pct drop in Q1
* Remy says China to weigh on sales in Q3
(Adds detail, background)
PARIS, Oct 17 (Reuters) - French spirits group Remy Cointreau said its Chinese business would continue to weigh on sales in the coming months as wholesalers run down large cognac inventories amid sluggish demand.
The maker of Remy Martin cognac, Cointreau liqueur and Mount Gay Rum said on Thursday revenue declined 5.3 percent on a like-for-like basis to 294.4 million euros ($397.2 million) in the three months to Sept. 30, its fiscal second quarter, compared with a 2.3 percent decline in the previous quarter.
"In the third quarter, Remy Martin is expected to remain adversely affected by certain measures taken in China and by the level of retail inventories," the company said.
Sales of Remy Martin cognac fell 8.3 percent like-for-like, compared with a 12.9 percent slump in the first quarter, Remy said in a statement on Thursday.
Analysts had expected cognac sales to decline by around 8 percent like-for-like in the quarter after the group warned in July that de-stocking would persist in the second quarter.
Demand was "particularly good" in the United States and throughout the Americas region, however. Europe saw sales growth despite a "challenging economic environment", while Japan and Indonesia also saw "good growth", Remy said.
The Chinese government's drive to crackdown on gift-taking and personal spending by civil servants, as well as slowing economic growth contributed to lower than expected sales of Remy Martin cognac during the Chinese new year celebrations and wholesalers were running large inventories
Remy generates about 40 percent of its operating profit from cognac sales in China.
European drinks makers, along with other consumer goods companies, have expanded into fast-growing emerging markets such as China in recent years in an attempt to offset slowing sales of premium spirits in austerity-hit Europe.
($1 = 0.7412 euros)
(Reporting by James Regan; Editing by Dominique Vidalon and Mark Potter)