China's Corruption Crackdown Is Crushing Cognac Sales

China's crackdown on corruption, under the watchful eye of president Xi Jinping, is only gathering steam.

French cognac maker Remy Cointreau continues to suffer from China's anti-graft campaign.

The alcoholic beverage company reported a 5.7% fall in revenues to €214.8 million in its first quarter.

Remy Martin brand, which primarily makes cognac, saw organic sales plunge 15.3% in Q1. Sales in Asia Pacific were still impacted by destocking in China.

Remy took a huge hit on Cognac sales last year, falling 32% in Q4, and 30% in Q3. "Rémy Martin was adversely affected throughout the financial year by the Chinese government's anti-extravagance policy, which had a negative impact on the consumption of premium spirits," it said in its last earnings statement.

"Cognac accounts for 80 percent of the company's operating profit, with China contributing half of cognac profits," according to Dominique Vidalon at Reuters.

Remy does expect Cognac sales to pick up in coming quarters however.

We've seen China's anti-graft campaign hurt catering and sales of luxury goods. Chinese officials became nervous about being caught playing golf. And now officials are starting to think twice about their investment decisions.