Festive brandy and Cognac packaging can boost year-end sales.
Retail sales are looking rosy for this holiday season, say many financial experts.
A combination of lower gas prices, an improved labor market and rising home values has helped U.S. consumers feel more confident about the economy and more willing to open their wallets. Brandy and Cognac brands are ready to entice them with seasonal high-end limited releases and fancy gift packs, supported by holiday-oriented advertising, marketing and in-store displays and POS.
This year’s Retail Holiday Sales Forecast by Deloitte predicts a 4% increase in spending over last year. Also bullish on year’s end in the National Retail Federation, which expects sales in November and December (excluding autos, gas and restaurants) to increase a solid 3.7% to $630.7 billion —significantly higher than the 10-year average of 2.5%.
Those forecasts bode well for brandy and Cognac. “Historically and traditionally, Cognac has been offered as a gift across different cultures,” says Benjamin Bourinat, a spokesperson for the Cognac Board. “The uniqueness of Cognac has always made it a luxury item. Brands and retailers can tap into this positioning to continue creating ultra-premium editions and upscale bottlings.”
The U.S. is the number-one market for the French brandy, with 63 million bottles shipped over 2014-2015. American brandy accounts for 59.4% of the category, according to the Beverage Information & Insights Group. All told, domestic and imported brandy garner a healthy 5.2% share of the distilled spirits industry in the U.S.
“Brandy and Cognac sales really pick up during the holidays,” affirms Peter Herlofsky III, wine manager at Liquor Boy Wine & Spirits in St. Louis Park, Minn. And customers are generally feeling more generous, spending a little more than usual and trading up in quality. “Holiday sales are on the more premium end of brandy and Cognac, especially Cognac,” he adds. “When they get invited to somebody’s house, instead of bringing over a bottle of E&J Brandy like they normally would, they’ll bring over some Hennessy Cognac. Or go even more premium for a good friend.” Cognac sales spike in the last few months of the year, Herlofsky says.
Indeed, many Cognac houses report that year-end sales are big business. “The holiday season is important to us; the fourth quarter accounts for around 45% of our yearly business,” says Jean Denis Voin, executive vice president of CIL U.S. Wines & Spirits, the American subsidiary of the family-owned Cognac firm Camus.
“The holiday season is big for Cognac. Courvoisier, and the category overall, see a much higher sales rate in the fourth quarter and we expect this year to be no exception,” says Neil Shah, senior brand manager, Cognac at Beam Suntory.
Domestic brandy fares well during the holidays, too.
“The holidays are by far the most important time of the year for E&J, with over a third of annual sales coming from the fourth quarter,” says Gerard Thoukis, senior director of marketing for E. & J. Gallo Spirits.
Retailers echo that sentiment. “Cognac and brandies have a nice following around the holidays,” says Jeff Kreston at Kreston Wine & Spirits, with two stores in the Wilmington, Delaware area. “It’s a nice gift option if people don’t know exactly what they are looking for. And they are usually in a good price range.”