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Cognac’s Grape Expectations

Posted on  | April 1, 2014   Bookmark and Share
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Big news from the Bureau National Interprofessionnel du Cognac’s annual snapshot: The Chinese are drinking less Cognac, catapulting North America into the spotlight as the most important market in the world. The U.S. in particular is up 10% over the year ending July 2013.  

How is this happening? In multiple ways. While VS has had a stronghold in the urban market for years, there is gradual but positive growth in higher-end offerings as well as innovation across the category and good old-fashioned educational outreach. The upswing has led many to ask: Is Cognac going more mainstream?
 
Old, New & Everything In Between

Four big brands—Hennessy, Rémy Martin, Courvoisier and Martell—control 75-80% of the world’s Cognac inventory (the figure is even higher in America). But with mostly minimal gains or declining sales over the past six years, many of these producers took the path of innovation this decide.

Beam’s Courvoisier launched Rosé (a blend of Cognac and French red wine grapes); C by Courvoisier (a double barrel-aged product); and Gold (a mix of Moscato and Cognac). The blends, marketed as lighter to drink, have been well-received by females and mixologists. Taking a different approach, Rémy Martin created 1738 specifically for the U.S. palate, also launching V, a clear super-premium extension targeting white spirit drinkers.

Bacardi’s recent foray in to the category is D’ussé, a moderately priced VSOP aimed at new drinkers looking for a more approachable sip. And A. Hardy USA President Mark Levinson says the brand is launching a brand called Elation (Nectar de Poire) in 2014 and is working on a few additional Cognac-based products.

Category leader Hennessy has crossed the 2 million case mark and shows no signs of slowing down thanks to a multi-million dollar media spend. Up 3.5% in 2012 and another 6.5% in 2013, their innovations are just beginning. Last year saw the U.S. launch of Paradis Imperial ($2,700 a bottle) in the U.S. New entries planned for 2014 include the brand’s latest (fourth) Limited Edition VS art bottle ($30-$32); and a new edition of Hennessy’s Limited Edition VSOP series ($50-$60) in a redesigned carafe.

Frapin Cognac’s Alain Royer says the interest and curiosity of Americans consumers for brown spirits in general has opened their eyes to trying offerings in the Cognac category. He sees growing interest in premium products like his Fontpinot, VIP XO and Extra as well as Cuvee 1888.

Artisanal producer Delamain specializes in old Cognacs (XO and above). The brand’s managing director, Charles Braastad, believes it’s all about quality over quantity: “Delamain is fine wine lover Cognac. Our customers know what they are looking for.”

Learning Curve

“What’s the fun in making a great product if consumers do not understand it?” Pierre Ferrand’s VP of the Americas Guillaume Lamy asks a question that plagues the category. Thanks to the BNIC, an organized educational effort has been prevalent in the U.S. the past five years, both with trade and consumers.  Rémy Martin has enjoyed success with the Heart of Cognac Experience, an interactive re-creation of a visit to the Cognac house.

Bartenders have been rediscovering Cognac as a base in classic cocktails like the Sidecar and Sazerac for years. Brands like Pierre Ferrand have found a niche marketing Cognac usage among mixologists. While Ferrand has had significant on-premise gains with the house’s Ambre and 1840, Lamy says there’s still a long way to go.

Hardy Cognac is promoting their Maison Rouge label to the cocktail market as well as VSOP. Levinson points out the both the availability and price point as a factor for helping drive the brand’s sales up 25%.

The leading Cognac brands have also launched programs to capture share of the cocktail space. Emma Medina, VP Marketing, Rémy Martin U.S., says, “We’ve seen an increase in the number of occasions for drinking Cognac. The category has expanded from almost solely an after-dinner drink to bottle service listings and cocktail menus.” Close competitor Courvoisier has also focused efforts on bartenders, launching Courvoisiology, a platform designed to spotlight Cognac’s mixability.

These efforts are showing traction, both across established brands as well as smaller houses looking to grab share of the market. “Our image of overpriced and harsh spirit is starting to fade, and we are entering gradually the circle of the ‘farm to table’ spirits category, highly respected by many consumers that love to drink small batch bourbon, single malt scotch, boutique rums, etc.,” explains Lamy.
 
An interesting example of gradual consumption pattern shift is a high quality restaurant chain such as Legal Seafoods that put a Cognac cocktail  — Anjou Pear, made with Grey Goose Poire, St-Germain, Pierre Ferrand Ambre, lemon and sugar—on their menu two years ago. It was supposed to be seasonal, but it has remained on the menu, nonstop, ever since.


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