While much of talk lately in the spirit business has been about the surge of whiskey sales in the US, the other brown spirit – brandy and Cognac – has managed to rebound quite nicely from the economic turmoil of a few years ago and even build on a solid growth trend here.
Bolstered over the past few years by a steady growth trajectory, the major Cognac houses have produced line extensions incorporating contemporary ideas in aging, taste and marketing, and spruced up the look of many of their traditional flagships. Newer brands are appearing as well, and older, smaller houses are concentrating on building a stronger base here, using cocktail culture as a launching pad to build interest at retail, although the three leading brands account for about 90 percent of volume.
All of which has led Cognac to solid sales: overall, according to Beverage Information Group figures from 2013, the sub-category was up 3.4 percent.
Similarly, among American brandy brands, the three category leaders are responsible for about 90 percent of volume, and accounted for most of the growth. Domestic brandy was only able to notch a 1.4 percent increase last year; in total, including the faltering imported brandy (excluding Cognac) sub-category, which was down 4.2 percent, all of brandy and Cognac grew by a healthy if not impressive two percent in 2013.
Mixability Driving Growth
While traditionally seen as a sipping beverage and a luxurious, aspirational spirit, Cognac has made inroads at the VS end by developing interest in the less expensive age expression as mixable, says Agnès Aubin, marketing director of the Bureau National Interprofessionnel du Cognac, the agency that represents Cognac producers internationally. “The consumption of Cognac VS has grown seven percent in volume in 2013-2014 because of the cocktail industry. VS is used to create very rich and aromatic cocktails that perfectly fit with the U.S. palate.”
It’s the way forward, according to most brand reps – creating multiple occasions for new consumers beyond contemplative sipping. “Across all demographics, we have seen Cognac consumption lean towards mixology, both on-and off-premise,” says Claire Richards, Director of world whiskey and Cognac at Beam Suntory, which imports Courvoisier.
“The consumer has realized that it is possible to mix certain marques to create unexpected cocktail recipes, and also to provide more character to classic cocktails like the Old Fashioned and Sidecar. Fans have also realized new occasions for enjoying Cognac, expanding beyond traditional, expected scenarios such as after-dinner,” she says.
“It’s still fundamentally intriguing to the consumers, the idea of Cognac in mixed drinks,” says Rodney Williams, senior vice president for Hennessy at Moët Hennessy USA. “But there are really accessible, delicious, refreshing cocktails to be made with Hennessy, and we’re working with a team of mixologists to engage the Millennial in particular.”
Matthew Grace, COO for CIL US, importer of Camus Cognac, says it’s especially important for emerging brands trying to stand out with different flavor profiles to develop new occasions.
“The entire category needs to push Cognacs as an alternative to brown spirits and even other spirits, as mixable especially at the lower price points,” he says.
It’s also important, say some, to take the solid period as an opportunity to educate the trade better about Cognac. “Cognac makers should spend more time to educate the trade and consumers rather than appeal to their luxury,” says Guillaume Lamy, VP Americas for Cognac Ferrand. “Too many people think of Cognac as an overpriced marketing product, rather than as an authentic spirit with history and quality.”
While growth has been steady here, the recent retreat of the Asian market, particularly China, has augured a return to focus on the U.S. for growth. However, recent reports from observers indicate price reductions are being taken at year end to boost sales.
Meanwhile, brands executing a steady marketing and advertising plan have mostly been able to maintain growth, though that growth came mainly due to the power of U.S. best-seller Hennessy – last year up more than five percent (a volume equivalent to the entire sub-category’s increase). Its recent success have been a result of flexibility in price and image of its broad portfolio and an aggressive advertising effort, particularly devoted to increasing cocktail drinking occasions, Williams says.
Cognac benefits from what he calls a retreat to quality, especially as young consumers are looking for authenticity as they discover spirits. As for marketing, Hennessy’s recent advertising campaign, “Never Stop. Never Settle.” will continue, with increased participation of hip-hop artist Nas, part of the way the brand keeps current and engages new legal age drinkers. Recent packaging innovations include another edition of the brand’s artist-designed Limited Edition VS bottle, and a redesigned Privilege Limited Edition VSOP presentation.
Hennessy isn’t the only brand immersed in hip-hop culture. Bacardi’s newcomer D’Usse, which recently launched in select markets a limited release XO expression made from a blend aged at least 10 years, has leveraged the endorsement of rapper Jay-Z in its marketing, while Conjure Cognac is co-owned and promoted by Ludacris.
Stacy Belter-Saltiel, Brand Manager at D’Ussé, says there’s lots of room for new brands to emerge here. “Although Cognac is dominated by a few large brands, it is still a relatively uncluttered category. With D’Usse, we saw an opportunity for a new brand that is different from the current offering – we felt there was space to reinvigorate a category with an authentic, super-premium Cognac innovation that leverages two centuries of Cognac-making history with a modern sensibility.”
Other brands are focusing on updating their packaging and connecting with new consumers. Rémy Martin recently unveiled a new look for its VSOP packaging with a richer red label and focus on the brand’s Centaur symbol. In 2013, LOUIS XIII launched the second edition of a Rare Cask – a cognac that was discovered by the prior Cellar Master, Pierrette Trichet as she conducted routine tastings. Initially intended for classic LOUIS XIII, it was found to have a slightly different taste profile and alcohol content, and was bottled as a limited edition.
Going forward, the brand hopes to build the reputation of Cognac as a quality spirit, says Emma Medina Vice President of Rémy Martin VS, VSOP, V & 1738. “We believe that consumers need a deeper understanding of what makes Cognac a unique brown spirit and how to enjoy the product.
Educating consumers on how Cognac is made – from selecting the grapes, to distillation, to aging and blending, is an important part of fostering a greater appreciation for this category. This is why Rémy Martin has created the immersive Heart of Cognac Experience, an interactive consumer education program, to give consumers the confidence in selecting Rémy Martin as their spirit of choice.”
The Heart of Cognac Experience will travel to seven cities across the U.S., with the goal of introducing more than 10,000 consumers to Rémy Martin.
Other major brand activities include Courvoisier’s “Exceptional Journey” campaign, celebrating the path toward excellence and featuring an original Web series hosted by celebrity Chef Roble Ali, which tells the stories of five individuals on their own exceptional journeys, celebrating the passion that goes into their crafts and the moments that have defined their careers.
Small but Unique
Outside of the big brands, smaller houses have continued to target U.S. consumers – Camus offers a VSOP entirely from the Borderies region, as well as the unusual Ile de Re line, distilled and aged on an island off the coast of the French mainland, with cellars as close as 10 meters from the Atlantic.
Tesseron Cognac, a family-owned Cognac house, for the first time made its Signature Collection and Royal Blend bottlings available nationwide. Each of the four offerings – XO Passion, Extra Legende, Tresor and Royal Blend, are at the top-end of the pricing tier ($300, $500, $1,200 and $1,500, respectively).
Delamain, another family-owned house which only produces Grande Champagne Cognacs at XO range and above, repackaged its Delamain Vesper (a blend of 30- to 35-year Cognacs) and introduced rare vintage bottlings – limited edition Delamain 1963, 50 year olds; and Delamain 1973, 40 year old, both single-cask, single estate, Grande Champagne Cognacs. A. Hardy USA introduced its new VSOP Organic Cognac, certified by Ecocert, meaning it contains all-natural ingredients and no chemical additives.
Brandy Rises with Whiskey
Meanwhile, American brandy marketers are exploiting their commanding position to roll out flavored iterations to introduce new consumers to brandy.
Anna Bell, director of marketing at E&J brandy, says the growth of American whiskey can be useful for brandy marketers. “The resurgence of whiskey can be looked at as a threat to brandy or as an opportunity. As whiskey grows, shelf space demands are putting the squeeze on brandy. Moreover, brandy is all but invisible to the Millennial drinker these days – if they have even heard of brandy, they have no idea what it really is or how to drink or why they should drink it.
“E&J believes brandy has a unique opportunity in midst of the current whiskey boom to tell its own story. Trade and consumers seem receptive to learning about and trying new variants of whiskey. We believe we can leverage this circumstance to restart a conversation, maybe even a revival, with brandy; and as the leader of the American brandy category, we truly believe E&J should lead that conversation.”
Another opportunity lies with the growth of Cognac. “We believe the growth in Cognac has trickled down to the brandy segment, since it is priced more competitively,” says Vicky Arcos, brand director at Paul Masson Grande Amber Brandy. The brand does especially well in Texas, New York, Georgia and Maryland, accounting for about 30 percent of total volume. Last spring, the Constellation brand explored the explosion of flavor innovations by launching Paul Masson Grande Amber Peach, with sales surging since then.
“Consumers are more apt to try new and novel things and flavored brandy falls into that. There is a huge opportunity to capitalize on the growth of the category by developing new products that excite the consumer, while also staying true to the core brand,” she says.
Mary Crae Guild, spokesperson on brandy for Christian Brothers, says their introduction of honey flavor in 2011 and this year’s peach has attracted new interest and consumers to the category. Christian Brothers also produces a filtered clear version of VS, called Frost, which has extended the traditional American brandy offerings beyond VS, VSOP and XO.
She sees cocktails presenting hope to brandy marketers, just as it has for Cognac producers.
“The category has been a bit soft, but it has become a lot steadier in the recent years but with the resurgence of cocktail culture,” she says. “We have seen some lift as well as some excitement for the flavored brands, especially from younger and ethnic consumers.”
Except for the fact that they are both French grape brandies made with rules that govern their production, the paths of
Cognac and Armagnac couldn’t be more different.
Neglected internationally for many years, the fortunes of Armagnac are on an upswing lately, with the governmental agency in charge reporting sales in the U.S. up 34 percent in volume from July 2013 to June 2014 – and up 40 percent alone in the first half of this year. This is off a very small base, but for fans the return of the robust and complex Gascony spirit has been heartening.
In a region where ducks outnumber people 500 to 1, it’s not surprising that the methods used to create Armagnac are very
traditional; many Armagnac stills are heated by open wood-fueled fires. Sometimes they’re heated in stills that once travelled from vineyard to vineyard, with family gatherings in the still house a high point of the distilling season only a few weeks a year. Either twice-distilled in pots or single-distilled in small continuous stills, Armagnac is known for intensity of flavor, a greater impact of fruit and spice and less interest in a mellow and smooth Cognac style.
Christine Cooney, whose Heavenly Spirits imports and distributes five labels of Armagnac and four Cognacs, says her business has been growing steadily over the last five years. “We attribute that growth to a general interest among American consumers in artisanal spirits from all over,” she says. “Even though that’s a term overused and misused, Armagnac is nothing if not artisanal.”