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Inside the Brandy Bunch: Rediscovering a Complex Category

Posted on  | November 2, 2011   Bookmark and Share
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The brandy category is like a Brady Bunch family reunion, a mash-up of siblings all struggling to exist under one (categorically defined) roof. Technically, brandy is divided in to eight sub-categories: Armagnac, Cognac, Calvados, domestic brandy, fruit brandy, grappa, imported brandy and pisco. It’s tricky for consumers to determine what they like and why, with a broad range of brands and countries waving their flags for a share of stomach. By staying on top of the major trends, you can help them.

Breaking the category down by the numbers offers some insight as to what we’re drinking in the States: domestic brandy (including fruit brandy and applejack) makes up the bulk with around 6.3 million 9-liter cases, followed by Cognac at nearly 3.4 million, then imported brandy (where pisco and grappa reside, along with Mexican and Spanish brandies) at a declining 580,000 combined cases.

Domestic brandies have been growing, thanks in part to Midwestern stalwarts where drinking brandy is part of the “Ice Belt” culture. And higher-priced Cognacs have also started to see some growth after years of a tough economy, where trading down often meant swapping imports for their less expensive domestic counterparts. In fact, the Bureau National Interprofessional du Cognac (BNIC) recently reported that Cognac in the U.S. has managed a 0.6% increase in 2010 after three years of double-digit declines. Someone, it seems, is doing something right.

Moving Past The Snifter
Perhaps the biggest driving force behind the brandy category is the consumer. Suppliers, retailers and bartenders all agree that people are asking more questions about what, exactly, they are drinking.  “Cognac is a mystery to most people,” explains Patrick Sullivan, Director of Bar Operations at Legal Sea Foods, with locations in ten states across the Northeast and Mid-Atlantic states. “A little knowledge is a dangerous thing,” he adds.

Which leads to that thing called the Cognac stigma, or the widely-held notion that Cognac is stuffy and old. Though it seems obvious, it wasn’t until recently that Cognac producers finally recognized an opportunity to change perception. Guillaume Lamy, VP of North America for Cognac Ferrand, concedes, “We have not done a good job explaining our craft; and now we are trying to catch up as fast as we can.” As part of this recent push, the BNIC created a website
titled ExperienceCognac.com containing a wealth of knowledge gleaned from such industry experts as David Wondrich, Paul Pacult, Doug Frost, Andy Seymour and Dale DeGroff.

The takeaway is clear—Cognac was essentially the foundation of mixology, used in punches in the 1600s and later in American drinks like the Julep and the Sazerac. With this credibility has come a noticeable reconsideration among both bartenders and consumers. Even Laird’s Applejack, first made in 1698 when colonists were looking for a way to take hard cider up a notch, has enjoyed a resurgence.

“I have a cocktail called the Calypso. I list the main spirit as Pierre Ferrand Ambre. I do not use the word Cognac and it allows me to have a dialogue with my guest,” explains Lynn House, Chief Mixologist at Blackbird in Chicago. “This strategy has proven very successful and [the cocktail] is one of my top sellers.”
These consumers are now taking their knowledge to retail stores. Emmett McDermott, Fine Wine and Spirits Manager at Liquor Land in Boston, says the top brands continue to dominate sales but “a more educated consumer wanting to learn about the quality players and how to decipher the terms on the label” has focused more interest in smaller brands like Pierre Ferrand, Kelt, Hine, Marie Duffau, Constantino and Le Panto.

Category Innovation
“I would say that it’s been a difficult market for domestic brandy in particular over the past few years; the competition from other spirits categories has been intense,” says Mark Koppen, marketing manager at Heck Estates, producer of Korbel. To succeed, both Cognac and brandy producers are focusing on innovation as a way to reach a broader market. This includes boutique entrants, flavored renditions and changes in labeling to show vintages and varietals.

Josh Hafer, corporate communications manager for Heaven Hill, which owns Christian Brothers, agrees that the biggest challenge to the category is attracting new consumers. “We think that will happen with the emergence of flavors,” says Hafer. In 2010, Christian Brothers, the third largest domestic brand, launched a honey flavor to reach new consumers as well as offer a line extension to existing drinkers. 

The top three in the Cognac category—Hennessy, Rémy Martin and Courvoisier—all have a plan on how to reach these new consumers. For Courvoisier, it’s focusing on like-minded Scotch and wine drinkers. The brand recently launched a Connoisseur Collection, becoming the first major Cognac brand to offer an aging statement on the bottle, as well as Courvoisier Rosé, a lower-alcohol (18% ABV) blend of Cognac and red wine grapes, attractively priced at $24.99.
Rémy Martin has shown small gains between 2009 and 2010 with celebrity partnerships ranging from R&B artist Usher to the more sophisticated tie-in with Mad Men (the acclaimed television series that has made retro cocktails from the 1960s cool among viewers). And 2.1-million-case leader Hennessy is going after bottle service and versatility in cocktails with Hennessy Black, the brand’s first major line extension in almost 50 years. Designed to be mixable, Hennessy Black is lighter in taste with floral and fruity aromas, and hints of honey and citrus.

Camus has gone in the direction of vintage-dated Cognacs, recently announcing a range featuring: 1964, 1970, 1971, 1974, 1980, 1988, 1989 and the exclusive Pionneau 1969. Priced to retail from $280-$1,250, the vintage-dated 750mls should appeal to eau-de-vie connoisseurs as well as gift-givers with birth years in mind.

There are promising signs for micro-niche Cognac as well. French-born Nicolas Palazzi’s NYC-based PM Spirits curates distinctive, small-batch bottlings. Guillon Painturaud, for example, was aged on lees, creating a flowery, creamy character, while Paul Beau delivers a woodier, more rustic profile. Paul-Marie & Fils “Tres Vieux Fut #3” Pineau des Charentes is an aperitif or dessert wine to which Cognac was added before fermentation; the light (17.5% ABV), sweetish spirit has been paired with foie gras at Le Bernardin.

Focusing on the Cocktail
The artisanal and historical nature of brandy makes it an obvious choice for bartenders capitalizing on the return to classic cocktails. This is something the BNIC and Cognac producers have been focusing heavily over the past year with online resources, cocktail competitions and educational trips to the region to learn more about production and heritage. The BNIC reports a worldwide shift in consumption trends based on new drinking occasions, with 70% of Cognac served over ice, in cocktails or as a mixer.

It’s not unusual these days to see a 22 year-old ordering a Sidecar, explains Chris Bostick, General Manager at The Varnish in Los Angeles. “Cognac is such a classic ingredient in cocktails, that its use is becoming more and more recognizable. In the past, Cognac to the majority of the drinking public was just thought of as something you drink in that funny shaped glass while smoking a cigar after an expensive meal.”

Domestic brandy producers hope this leads to a halo effect with more widespread usage in cocktails with their products as well. Korbel Brandy recently held a cold-weather cocktail competition aimed at consumers and home consumption, promoted online via Facebook and other social media, a new focus for the brand. “We have always supported our key markets with promotions specifically targeted to those areas; we are now expanding our efforts by supporting those programs via online and mobile media,” says Mark Koppen.

Surprise on the Shelf
Retailers see consistency in regard to consumer demographics at point of purchase; ethnic and mature drinkers still drive a bulk of the sales. But new customers curious about brandy include single malt Scotch drinkers and the “cocktail set,” which McDermott defines as younger consumers who don’t want to drink their father’s brands and are open to experimenting “usually away from domestic to better quality, similarly priced imports.” Spirits buyer Brett Pontoni at Binny’s Beverage Depot, with 26 locations in Illinois, also sees hipper, more educated consumers less concerned about price and more interested in learning about niche offerings.

Lamy at Cognac Ferrand believes tastings and education at point of purchase are the backbone of the brand’s business strategy: “A basic store tasting, if well conducted, is still the most efficient tool to cultivate a niche in our market.” With many retailers stocking hundreds of SKUs across the brandy category, staff trainings are also a crucial element. This is most apparent at a store like Hi-Time Wine Cellars, where Liquor Specialist Forrest Cokely has to manage over 300 different brandies. “Hand-selling is the key to most purchases—especially for brands that don’t have a ‘fixed’ commercial identity; if we weren’t there to encourage, validate and explain the product, it would remain unknown and unsold.”

As expected, brandy depletions spike as the weather becomes colder and during the holiday season according to retailers. Yet summer sales are picking up as bartenders feature brandy-based cocktails on menus year round. Bostick feels Cognac falls in to a tough place in the overall category, making it difficult for consumers to discern quality: “The perception is that if it’s inexpensive, it must be bad and the more it costs must mean quality. While there are truths to both statements, they don’t apply all the time.”

Generally, Cognacs are higher-priced than their domestic counterparts, largely in part to maintaining the cost of a vineyard and extended aging. Add in the Euro versus the U.S. dollar, and most Cognac producers have a hard time competing on price alone. Lamy says for this reason, showing total transparency of the Pierre Ferrand production process is crucial to converting consumers to Cognac.

A New Nightcap
The industry has been watching the brandy category with interest over the past five years as we’ve all seen a confluence of events affect volume both positively and negatively: a recession and the slow rebound, the return to classic cocktails, and massive marketing efforts from upstart regions (ask anyone who was at Tales of the Cocktail this year about pisco.)
As Lynn House matter-of-factly states from her perch behind the bar in Chicago, “Will brandy and Cognac exceed whiskey sales in this country? No. However, the category does continue to grow, bartenders are incorporating it in to their repertoire, and the consumer is becoming savvier.” All signs for a positive outlook on brandy in years to come.



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