BRANDIES BRANCH OUT

They are consumed in snifters after dinner; they are in some of the hippest retro-cocktails. They can be upscale spirits, hand-crafted and aged, yet they are generally not as expensive as cognacs. Increasingly, the great brandies of the world are being discovered by younger and older consumers and by both men and women.


For the last several years, brandy brands have been seeking to expand their image — and their efforts have been paying off. According to the authoritative Adams Liquor Handbook 1998, the total brandy/cognac market saw its sales increase by 2.6% in 1997, to reach over 7.7 million cases nationwide. In the control states, the growth is even more marked. Control state brandy sales, excluding cognacs, were up by 3.5% between March 1997 and March 1998, with domestic brandies showing a growth rate of 4.1%. (Meanwhile, cognacs themselves grew by 11.4% in the control states during the same period.)


And some brandies are on fire. The brightest of these is Paul Masson’s Grande Amber, from the Canandaigua Wine Co. The third-largest domestic brandy on the market, Grande Amber’s sales shot up 44.6% in the control states and 33.3% nationwide in 1997.


Other growth brands include Christian Brothers, from IDV North America, the number two domestic brandy which grew 5.8% nationally, though it had a slight sales decline in the control states. Almaden, from the Canandaigua Wine Co., increased sales nationally by 6.2%. In the control states, Coronet VSQ from Heaven Hill Distilleries saw its sales grow by 3%.


Meanwhile, several of the top imported brands also showed growth. Presidente, nationally the number one imported brandy (excluding cognacs), was up by 4.3% nationally and by over 10% in the control states, while its sister brand from Domecq Importers, Don Pedro, grew by 1.6% nationally and by a whopping 26.3% in the control states alone. David Sherman’s St. Remy, the number three imported brand nationwide, and the number one imported brandy in the control states, grew by 16.4% nationally and by 7.4% in the control states.


What’s the secret to brandy’s growth?


 


LOOKING UP

The biggest trend in brandies is the continued attention suppliers are paying to the upper-end of the category. No one has had greater success with this strategy than Paul Masson’s Grande Amber. When the Canandaigua Wine Company received the marketing rights to Paul Masson Brandy in 1993, the company set about reformulating and repackaging the product. The result was Grande Amber, which is aged for three years in oak and whose advertising tagline is “Taste the difference between the good and the Grande.”


“The world did not need another low-cost brandy,” explained David Boggs, brand manager. “Brandy and cognac are miles apart in terms of consumer perception. We saw that there would be a real opportunity for us if we could split the difference.” According to Boggs, Grande Amber is currently growing at rates of approximately 25% nationally.


LEADING BRANDS OF BRANDY IN THE CONTROL STATES

(Mixed Cases)
12 months ending March


DOMESTIC

Brand
Supplier
1997
1998
%Change

E&J
E&J Gallo Winery
405,388
394,239
-2.8%

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Christian Brothers
IDV North America
273,042
270,224
-1.0

Paul Masson
Canandaigua Winery
122,621
177,275
44.6

Coronet
Heaven Hill Distilleries
27,593
28,415
3.0

Monarch
Monarch Importers
26,793
25,886
-3.4

Top 5 Domestic Brands
 
855,437
896,039
4.8%

Other Domestic Brandy
 
56,181
52,842
-6.0%

Total Domestic Brandy
in the Control States

911,618
948,881
4.0%

IMPORTED


St. Remy
David Sherman
17,712
19,014
7.4%

Raynal
Shaw-Ross
18,072
15,496
-14.3

Jacques Cardin
Sidney Frank
14,309
14,505
1.4

Presidente
Domecq Importers
8,233
9,061
10.1

Jenkins
Jenkins Spirit Corp.
4,990
3,116
-37.6

Top 5 Imported Brands
 
63,316
61,192
-3.4%

Other Imported Brandy
 
24,842
24,529
-1.3%

Total Imported Brandy in the Control States
88,158
85,721
-2.8%

Total Brandy in the Control States
999,776
1,034,602
3.5%


Other brands, both domestic and imported, have also seen the potential of an upscale image. Two years ago, Korbel, nationally the number four domestic brandy, underwent a packaging change and a price increase. The brand, made from California grapes and oak-aged, is currently priced approximately 50 cents to $1 higher than Paul Masson’s Grande Amber and about the same as E&J V.S.O.P., E&J Gallo’s upper-end entry in the domestic brandy market. According to Gary Heck, president & chief executive officer at Korbel Wine Cellars, Korbel Brandy’s sales slowed initially after the changes but have since been stabilizing. Meanwhile, Christian Brothers’ premium line extension, Christian Brothers V.S.O.P., continues to grow. The line extension was introduced 18 months ago and priced $1 to $2 higher than Christian Brothers Amber Brandy, the line’s popular brand.


On the import side, Shaw-Ross has replaced Raynal Reserve Extra, the upper-end offering of its Raynal French-bottled brandy. The new premium entry features an age statement on its label, Raynal Five-Year-Old, and is priced $2 to $3 more than the line’s base brand, Raynal V.S.O.P.


Phil Consolo, marketing director at Shaw-Ross, says the company is pleased with the premium images of its brandies — both the Raynal brands and its Cardenal Mendoza line from Spain. “There’s been a return to style in what Americans are doing, eating and drinking,” he said. “You see it in the cigar phenomena and in the popularity of music from the 1940s and 1950s. There’s a whole feeling of style and sophistication. People are willing to pay for more quality.”


Indeed, said Hector Hernandez, senior brand manager of Mexican & Spanish brandies for Domecq Importers, the consumer trend toward upscale products is so strong that his company saw its effects even while not actively courting the business. “Without doing anything, our Azteca De Oro has been up consistently 5% to 6% a year,” he said. With a retail price of approximately $27 for a 750 ml bottle, Azteca De Oro is Domecq’s most upscale Mexican brandy. And in September, Domecq plans to begin actively promoting the brand’s superpremium positioning, with on-premise promotions, such as tastings in high-end Mexican accounts in selected cities.


Bill Thompson, vice president of brand development at Sidney Frank Importing, agrees with the assessment of brandy’s potential to continue growing as an upscale spirit. And he finds that the trend toward more upscale products takes the form of longer-aged brandies. He pointed out that several brands, including the two largest, E&J and Christian Brothers, have come out with aged products over the last few years.


And so has Sidney Frank’s French brand, Jacques Cardin. Its X.O. version, introduced late in 1996, is aged for seven years, compared to the brand’s V.S.O.P. version, which is aged for three years. While Jacques Cardin V.S.O.P. is bottled in the U.S., its X.O. is bottled in France. “We’re really promoting [the X.O.] as a really inexpensive cognac,” said Thompson. “At the bottom of the cognac market, you get two-year-old brands. We’re offering a seven-year-old.”


 


INTO THE MIX

At the same time that many brandy suppliers seek to emulate cognac’s success (see sidebar), they also say that brandy may have an advantage over its higher-priced sister spirit. “Cognac is a whole world unto itself: a lot of times people won’t mix it; they’re afraid to violate it,” said Canandaigua’s Boggs. “But there’s a shift back to classic cocktails, too.”


And brandy suppliers are pursuing the mixability angle, in all its manifestations. “People consume brandy with ice, with water, with cola and 7 UP, with orange juice, with cranberry juice, all the way to cocktails like the Brandy Manhattan and the Brandy Alexander,” Boggs pointed out.


Many believe that mixability may be the way to go, when it comes to growing the market for brandy. “The whole [brandy] industry is looking for brandy to be something more than an after-dinner drink, something you drink warm before bed,” said Korbel’s Heck. “That consumer is an aging consumer.” Korbel is currently working with Ghirardelli Chocolates on a drink mix for its brandy.


Larry Kass, group marketing manager for whiskies, brandies & cognacs at Heaven Hill Distilleries, pointed out that the advertising for Coronet VSQ features the brandy in a variety of drink applications. “There are the variations on classic cocktails, like the Sidecar, there’s the growth and experimentation in Martinis, and Coke & Brandy is a strong franchise,” he said. “We’re adapting the product to people’s usage and are being inclusive in its marketing.”


The expansion in products being offered and images being portrayed have helped brandy to establish a broad appeal. “Brandies have a very broad demographic base. In age, it’s from 25 and up,” said Shaw-Ross’s Consolo. He pointed out that his company’s Spanish brand, Cardenal Mendoza, has been crossing over from being a product that mainly appeals to the Hispanic demographic to being “a national brand in a national category.”


Though many of Domecq’s brands have been most popular among ethnic consumers — with its Mexican brands (Presidente, Don Pedro and Azteca De Oro) appealing to Mexican-Americans, and its Spanish brands, including Fundador, appealing to consumers of Cuban, Dominican, Filipino and Puerto Rican descent — Hernandez noted that the Hispanic market in the U.S. is a growing one. “By the year 2005, Hispanics will be the largest minority in the U.S.,” he said, “and by the year 2051, one out of every four Americans will have some Hispanic background.”


And Domecq is looking to cross over into non-Hispanic markets as well, hoping for what Hernandez called “the Corona Beer effect.”


“Brandies have a lot of growth potential. We have a lot of places to grow,” Hernandez said.


Meanwhile, Heaven Hill has been targeting Coronet VSQ’s advertising at a younger market. “We position the brand as part of an active lifestyle, showing it in casual, outdoor settings, showing people in active situations like skiing and rollerblading,” explained Kass.


Canandaigua’s Boggs has found that the perception of brandy in the spirit industry doesn’t always keep up with the reality. “There seems to be a perception among retailers — and among consumers — that brandy is part of a male world,” he said. “But in opposition to this conventional wisdom, a lot of women are drinking brandy.”


 


THE TRIED & TRUE

Still, that is not to say that brandy suppliers are turning their backs on brandy’s traditional appeal. Many, for instance, focus on cigar-related events and promotions, such as Jacques Cardin’s cigar on-pack, available, in markets where legal, both on- and off-premise. Promotions connected with jazz music, such as Korbel’s cross-promotion of a jazz CD for the coming holidays, have also proven successful. And in ads, suppliers continue to display their brands in snifters, even as they also show them in a myriad of retro and new cocktails. “We still have that traditional snifter segment,” said Heaven Hill’s Kass.


Young, old, male, female, consuming it straight and mixed, different ethnic groups: the bottom line is that brandy has branched out. “There are so many different skews, any conclusion that you could draw about the general brandy consumer might be off base,” said Boggs. And that expanding appeal is good news for brandy.

Cognac’s Continuing Climb

The old saw — “All cognac is brandy, but not all brandy is cognac” — seems to hold true when it comes to sales. Cognacs, brandies that, by law, must come from the Cognac region of France, continue to see greater sales growth than the overall brandy market. According to the authoritative Adams Liquor Handbook 1998, cognac sales in the control states for the year ending in March 1998 grew by almost 11.5%. Furthermore, almost every leading brand posted growth in the past year, with Hennessy, by far the largest cognac brand on the market, growing by over 16% nationally and by over 20% in the control states.


Cognacs, the top-tier brandies in terms of price and image, are benefiting from consumers’ desire for products of quality and sophistication. Their success, said Larry Kass, group marketing manager of whiskies, brandies and cognacs for Heaven Hill Distilleries, “is a direct result of people drinking less but better. People are looking for product attributes.”


Look for complete coverage of the cognac market in the next issue of StateWays magazine.

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