Cognac & Brandy
As
a combined category, brandy and Cognac has doubled in sales
from ten years ago. While it might be climbing the ladder
slowly, it’s climbing nonetheless. In 2OO5, total volume
increased .7% to 1O.2 million 9-liter cases. A breakdown of
the statistics shows that most of the growth is in the
Cognac category. From 2OO4 to 2OO5 Cognac’s numbers
increased 1.5% while domestic brandies went up .5% and
imported brandies actually decreased by a little over 3%.
Additionally, the growth of last year is the smallest since
1994. One reason for this is the unwavering dominance of
vodka and other flavored spirits. In response, many Cognac
and brandy marketers have found new ways to maintain and
increase their presence in bars, restaurants and liquor
stores. From basic coffee and fruit brandies all the way up
to the luxury marques, this is a diverse category steeped in
history that continues to attract a broad range of
consumers, both traditional and offbeat.
It’s important
to note with these data, however, that it’s largely the VS
brands that are sluggish and pushing the entire Cognac
segment down in terms of volume, while higher marques
continue to drive the segment, says Dana Nicolas, US Brand
Director for Remy Martin VS, VSOP and 1738. “Higher marques
are continuing to grow as VS and lesser levels are slowing
down,” she adds, stressing that, “The Cognac category
continues to grow and thrive.”
COGNAC
DIVERSIFIES One of the
biggest factors driving Cognac and brandy sales today is
their continued and loyal consumption by African-American,
Asian and Hispanic consumers. Whether they admit it or not,
all Cognac houses regard African-American consumers, and,
increasingly, Hispanic drinkers, to be their most important
consumer groups. Asian buyers are still extremely faithful,
as well. Another factor driving sales is the curious,
explorative nature of younger drinkers to try new and
innovative beverages, whether neat or mixed into cocktails.
The latter segment seems ripe for effective, intelligent
promotion by Cognac and brandy marketers. Some grasp this
opportunity, others seem to ignore it.
Hennessy, for
example, hosts tastings at bars and clubs where customers
can sample innovative Cognac cocktails, says Yvette
Baez-Goss, Brand Director for Hennessy VS. This is an
effective strategy, as most customers in such settings might
never drink Cognac neat, but they are accustomed to drinking
flavored cocktails mixed with high-end spirits, she says.
“We’re allowing consumers to experience Hennessy the way
it’s consumed around the world,” she notes. To that end, the
company created a series of cocktails, such as the Hennessy
Moscow and the Hennessy Shanghai, to add a little
international flair. This strategy is especially effective
with more traditional consumers not into Rap or Hip-Hop,
Baez-Goss remarks, stressing that the Hip-Hop crowd remains
vital to Hennessy.
“We’re
constantly trying to influence their association with the
brand, constantly striving to have relevance for the
African-American male consumer, so whether it’s music or
technology, we try to stay abreast of what’s most relevant
in his life and surround the brand in those experiences,”
she comments. This is why Hennessy continues to be involved
with music, and may be partly responsible for Hennessy’s 57
percent US market share. “Hip-Hop has been pretty
significant for us and the community supports us.” One way
Hennessy reaches out to them is by flying Hip-Hop DJs to
France’s Cognac region to learn about Hennessy
first-hand.
This year, the
company is revitalizing its ad campaign with a big outreach
to the Hispanic community. One of the marketing tools
they’ll be using is a Spanish language television ad
produced at the suggestion of its Latin America media
agency. “The spot turned out so beautifully that we adapted
it to the general market and to the African-American
consumer,” explains Baez-Goss, noting that it’s rare for an
Hispanic ad to be adapted to the general market. But it
takes more than a television campaign to gain such
popularity in the Hispanic market. “Many members of the
Hispanic community, particularly the Caribbean Hispanic
community, constantly travel between the US and their home
countries,” she says. For many, Hennessy is the US link and
is what they take with them as a gift when they go
abroad.
Another program
Hennessy launched last summer is a national tour called
“Artistry”, that brings together DJs and singers. “Artistry
combines different musical genres, performers and Hennessy
cocktails in a way that no one has seen,” Baez-Goss says.
Part of the strategy behind these promotions is to generate
more awareness of Hennessy’s ultra luxury line. “We have
higher marques that consumers are largely unaware of which
rival the quality of Remy Martin Louis XIII. We think
there’s an opportunity to elevate our credentials by
building awareness on what we call the Prestige Range –
Paradis and Hennessy Richard,” she states.
Targeted to
African-American drinkers, Martell VSOP launched its “Rise
Above” promotion campaign last year. The company sponsors
parties at hip dance clubs and bars. It also hosted the 5Oth
birthday party for the Reverend Al Sharpton. “The profile of
the Martell consumer skews male, and is the highest
percentage of male consumers among non-whiskies,” says
Abegail Domond, Martell’s brand director. Domond remarked
that in 2OO5, Cognac sold more than 3.5 million cases in the
US, primarily from the African-American segment, with
Asian-Americans contributing to growth of the higher
marques, such as VSOP, XO and specialties. These consumer
groups, along with Hispanics, are Martell’s greatest
focus.
Addressing the
soaring popularity of mixed drinks, Domond remarks: “Like
other spirit categories, Cognac and Martell have benefited
from the cocktail renaissance and the trend toward premium
brands. Cognac-based cocktails and mixability continue to
drive Cognac growth and Martell is capitalizing on this
trend by promoting its VS and VSOP marques mixed with fruit
juices, sodas and tonics. Martell’s higher marques – L’or,
XO, Cordon Bleu, and Noblige (the newest marque in the
Martell portfolio) – are promoted to be consumed in the
traditional Cognac fashion: neat or on-the-rocks.” Asked how
the brand feels about such marques being used in cocktails,
Domond replies, perhaps diplomatically, “While all Martell
Cognacs are blended to be enjoyed in their purest form,
Martell VS and VSOP are also wonderful mixed with juices and
sodas in today’s popular cocktails.”
“Hip-Hop has
played a huge role in every brand’s success. The entire
category’s growth has been driven by Hip-Hop over the past
1O years,” says Nicolas of Remy Martin, adding, “Cognac was
doing okay, then there was an explosion. They drink it more
mixed, on ice with ginger ale, etc.” She continues: “Cognac
is hugely an ethnic-skewed market. More traditional,
Caucasian consumers don’t drink it as often, and when they
do it’s from a traditional snifter by a fireplace in cold
weather.” Nicolas also notes that not only is it important
to retain all types of existing consumers, but now, “You’re
playing in a bigger sandbox,” given all the super premium
tequilas, vodkas and other beverages in the market. “We need
to respect our existing consumer base, but ask what else can
we do to reach out to new drinkers,” she says.
To help achieve
this, Remy Martin will roll out a new advertising program
this holiday season that will include radio, print and
internet components. The company will also place interactive
banner advertisements on non-Remy websites. The firm will
continue to have promotions and tastings all year at on- and
off-premise accounts, host celebrity events, and hold
private tastings of its higher marques.
Courvoisier is
another house that appears to have branched out and
successfully bridged the gap between demographics.
“Courvoisier has had a successful year with programs that
have introduced the brand to new audiences and engaged our
core consumers,” says Brand Manager Allen Spence. Its big
campaign has been the House of Courvoisier, a program Spence
says combines luxury with the world of fashion, sports and
entertainment. The program recently hosted the Black
Entertainment Television Awards after-event party and had a
presence during the NBA All-Star weekend, where the VSOP was
used in specialty cocktails aimed at introducing younger
consumers to Courvoisier. Attendees got to sample the $5OOO
per bottle L’Esprit de Courvoisier, which contains vintages
dating back to the 19th century.
Courvoisier’s
other big promotional push was an education tour into five
major US markets last year by Pierre Szersnovicz, the firm’s
Cellar Master and Director of Liquid Quality. Szersnovicz
met with distributors, retailers, wait staff, bartenders,
and consumers. “He led in-depth seminars, hosted wait staff
education trainings and made visits to key accounts in each
market,” Spence says. As far as how consumers are enjoying
Courvoisier, he points to neat or on the rocks as being the
standards. There are some specialty cocktails that
Courvoisier has developed including the Brown Sugar, the
Courvoisitini and the CV Strawberry Lemonade. “Our drink
recipe program has helped us reach new audiences, especially
women,” he explains. “Courvoisier’s future looks to be very
exciting. We will continue to host House of Courvoisier
events throughout the country and are looking at other
exciting programming to reach our core new customers,” says
Spence.
A
NEW PLAYER The
ever-enterprising Sidney Frank Importing Company recently
joined the ranks of Cognac producers with three products,
including two flavored Cognacs, under the Jacques Cardin
name. Abaigeal Hendron, brand manager for Jacques Cardin
VSOP at Sidney Frank tells how this all came to be. “We work
very closely with a company in France called H. Mounier – a
small Cognac company that’s been around for hundreds of
years,” she says. A couple of years ago, when the company
decided to sell Grey Goose vodka to Bacardi, the late Mr.
Frank himself decided he wanted to get into the Cognac
business. “Cognac is a large market and the Cognac business
in the United States has basically doubled in the last ten
years and has more premium connotation than brandy because
of its delineation from the Cognac region,” says
Hendron.
Frank wanted a
piece of that action and knew that the category was
dominated by a small number of players. “He wanted to bring
something new to the category. We taste different, our
flavors are very innovative and our package has tremendous
positive feedback,” notes Hendron. She goes on to say that
they wanted something different with an upscale feel and
worked with H. Mounier for two years to develop it. “We sat
down with their master blender and went through what sort of
style we wanted for the product, what sort of flavor
profile; it’s very much a blend designed by the Sidney Frank
Company.” In addition to a traditional VSOP Cognac, the two
flavored VSOPs are apple and jasmin. “Apple is pretty hot in
the United States as a profile and the Jasmin has a floral
base rather than a fruit base so people are very intrigued
by it,” Hendron comments. The target audience, she says, is
a broad one, though they are specifically targeting three
main groups: the African American, Hispanic and Asian
communities. They’re also going after the 25- to 44-year-old
age bracket – both male and female. Hendron spells out some
of the strategies for attracting consumers to these three
new Cognacs, one of which is selling a VSOP at a few dollars
above what a VS would sell for. Packaging was also a key
focus point. “You get a product in a fantastic package with
a cool, hip name and people really like it,” she says. She
went on to say that in terms of mixed drinks, any sort of
carbonated drink or juice drink will complement Frank’s
Cognacs.
The focus for
the first six months will be on distribution, working with
bartenders and hosting tastings with as many consumers as
possible. “Jasmin and apple in a Cognac are unique and it’s
kind of a first for the business,” says Hendron. “I think it
will be refreshing to bring something new into the Cognac
category. There’s a lot of emphasis on the category and
there’s definitely room for somebody like us.” There is also
something of a legacy around the JC Cognac launch because
Sidney Frank passed away last January. “There were two
products that he was working on and was quite passionate
about before he died and this was one of them,” she notes.
(The other spirit was the recently released Michael Collins
Irish Whisky.)
AND
WHAT ABOUT BRANDY?
Although it’s the less famous side of the category and may
be less glamorous, brandy is still a spirit with clout. It’s
hard to imagine the cocktail world without such classics as
the Sidecar and Stinger, not to mention the concoction
created by Alexander Woollcott, the Brandy Alexander. From
lighter domestics to imports, brandy has a solid position in
the market. The top three domestics are E&J Gallo, Paul
Masson and Christian Brothers. E&J and Masson account
for the majority of growth, although domestic brandy sales
on the whole went down last year by just under two percent.
Imports account for 6.9% of the overall category with the
French brand Raynal leading the pack. Mexico’s Presidente
comes in second with St. Remy, another French brand,
rounding out the top three.
Although brandy
is still a solid performer, account and marketing experts,
as well as restaurant and bar staff, may need to focus more
on creative advertising campaigns, on- and off-premise
promotions, and greater consumer outreach efforts to boost
sales of their brands.
Christian
Brothers is one example of a domestic brand that had
flattened out and then got a new lease on life when it
changed hands several years ago. When Heaven Hill
Distilleries in Kentucky took over the brand in 1999, it
knew it would also acquire all the history that goes along
with the fabled Christian Brothers name. In 2OO2, the
decision was made to redesign the label. Justin Ames, the
brand manager for Christian Brothers at Heaven Hill explains
that it was time to make some adjustments. “The label needed
to be updated; a lot of people didn’t understand that the
regular Christian Brothers Brandy was really a VS-level
brandy. We played that up,” he explains. Ames also says that
they focused on on-pack promotions. One of the most
successful of the on-packs was a CD sampler by trumpeter
Chris Botti, who used to play with Sting. Heaven Hill also
included a 5Oml bottle of the VSOP on some of the VS bottles
to try and get people to trade up and build loyalty within
the family of brands.
Christian
Brothers is also getting in on the widespread popularity of
poker. “Christian Brothers drinkers, whether Hispanic,
African American or Caucasian, really enjoy playing cards,
so we’re going back to a Christian Brothers card deck
on-pack,” remarks Ames. He adds that within the African
American community, the company is looking to do tie-ins
with some barbershops: “In the African American community,
the barber shop is a key focal point – a gathering place.”
The idea is to have Christian Brothers sampled at an
invitation-only event where people go in, get their hair
cut, and maybe a manicure, while tasting brandy.
As far as the
Hispanic community, Christian Brothers has done tie-ins with
radio stations and DJs, and has sponsored events at
Hispanic-focused grocery stores in California. Ames says
this program can easily expand to the rest of the country.
“In the Latin American community, we do something called
‘CBB . . . y se vive’, which is basically kind of a word
play on to drink and to live.” Older Caucasian drinkers
still are part of the mix as well and Christian Brothers
still has tremendous equity with those consumers, he says.
“Mostly in colder weather states we have a huge following,
so we are focusing on doing some outdoor events with
Christian Brothers drinkers in those areas.” Ames also notes
that Christian Brothers’ popularity is almost evenly split
between men and women.
“For a product
like brandy, which can have a lower point of entry, it is a
much more attainable product, particularly if a consumer is
experimenting,” comments Heaven Hill spokesperson Josh
Hafer. “Cognac, too, can be a daunting experience in the
beginning. It’s about as approachable as entering wines
after having been a beer consumer for years. Christian
Brothers attracts those consumers by providing a diversified
family of products.” He points out that Christian Brothers
VS may be a point of entry, but so are high quality products
like VSOP and XO.
As for Hpnotiq,
a leading Cognac/vodka/fruit juice hybrid, Hafer cited the
brand’s impact “Hot Brands” Award for sales volume increase
during 2OO5.
SPREADING
THE WORD Tyrone Croom,
On-Premise Specialist from United Liquors says that his best
selling imported brandies are Constantino from Portugal and
Raynal from France. Domestically speaking, the Coronet VSQ
is on top. The two leaders for Cognac are the VS and VSOP
from Hennessy and Martell. Overall, the category has seen
growth from last year. “We’re looking at the brandy category
at about 15 to 2O percent, and then on the Cognac category,
between 1O to 2O percent,” states Croom, who attributes the
growth, especially in Cognac, to consumer knowledge.
“Consumers nowadays are just much more educated. People have
sophisticated palates,” he says. “It’s interesting because
all the things that are being touted about premium vodkas
(nuanced flavors and aromas) have always applied to Cognac,”
he observes, adding: “We’re finding consumers are (now) more
educated and it’s our job to make sure we point out all the
attributes of Cognac.” The Hip-Hop community is still huge
with regard to the impact on sales, he says. “With Cognac,
it’s about status and sophistication, and I think as far as
the Hip-Hop scene and the African American community are
concerned, those two things go hand in hand.”
Croom believes
that some of the lower-end flavored brandies, such as coffee
and blackberry, act as a gateway to more premium products.
Nine times out of ten, he says, bar patrons don’t know that
brandy is a key ingredient to a favorite cocktail. This
could be an opportunity to reach out to consumers and get
them to focus on a particular brand, he adds. When it comes
to getting customers to try brandy or Cognac, no one is more
influential than the bartender. Croom remarks that,
“On-premise, bartenders are our gatekeepers.” He appreciates
the importance of working with bartenders to keep them
informed and enthusiastic about products. In general,
educating staff about the heritage of a brand and getting
them excited about new promotion efforts goes a long way
toward getting one brand recommended over another and having
it featured on a cocktail menu.
Lloyd Foster,
Marketing Director at Classic Wine Imports says that his
best sellers are Hine and Pierre Ferrand. “Hine is actually
up a good bit for us; it has definitely grown over the past
year or two.” He also likes the domestic brandy, Germain
Robin, from California. “I think it’s worth mentioning,
especially since Robin was born into a Cognac family and
it’s produced in a classic Cognac brandy still.”
AND
FROM BEHIND THE BAR
Jonas Atwood, wine manager of Meritage restaurant at the
Boston Harbor Hotel, says that their biggest selling Cognac
is Courvoisier VSOP. He also observes a significant shift
with who the customer is. “The customer has changed
drastically over the last 5 to 1O years. The smoking ban is
one factor, because Cognac used to be popular with the cigar
crowd,” he remarks. Businessmen of all ages are the primary
consumers, he says, adding: “The most recent demographic is
African-American men and others savvy to the Hip-Hop
culture, which has glamorized Hennessy, Remy Martin and
Courvoisier.” For the most part, Cognac is ordered in
snifters, but occasionally on the rocks or with a mixer such
as Coke, he remarks.
At the hip
billiards and dance club, Felt, in downtown Boston, Special
Events Manager Danielle DiGiorgio comments, “Hennessy is the
most popular and people are drinking it with Coke, Hpnotiq
and neat.” She emphasizes the continued mark the Hip-Hop
community makes. “Within the past six years, with Hip-Hop on
the rise, I feel this liquor has not only gained popularity,
but with a younger crowd,” she says. She attributes this in
part to the number of Hip-Hop celebrities who sing about
Hennessy and Hpnotiq in their music, which has brought them
to the attention of younger drinkers. Overall, when it comes
to Cognac, DiGiorgio thinks that it’s going to take time to
really win people over. “It may just be a taste that grows
on you. The problem is, many people may not have the
patience to try something new, when they know what they
already like.”
Getting
customers to try something new is precisely why James Nicas,
owner of The Castle restaurant in Leicester, presents guests
with an extensive drinks menu after dinner. The list
includes some 19 Cognacs (including Paradis and a single
vintage Pierre Ferrand vertical collection) along with
Armagnac, Port, single malt Scotch, and other beverages.
“Cognac has gone over big time,” he says, noting that 26- to
44-year-olds are the strongest buyers now. “They want to
experience as much as they can, they feel it’s their time to
live a good life,” he observes, adding how this age segment
has driven the popularity of spirits over the past three
years. Many, he says, have a scotch before dinner and a
Cognac after dinner. Brandies, too, are big sellers,
especially in numerous variations of flavored or flaming
coffees, Nicas says.
A
RETAIL CHECK-IN Gary
Park, owner of Gary’s Liquors in Chestnut Hill reported last
year that the Cognac and brandy category was another strong
one for him, and this year it’s been more of the same. His
top-selling brandies are the domestic E&J and the
Italian import Stock, though a couple of other brands also
fare quite well. “Christian Brothers is doing much better;
they’ve relabeled and repackaged – it’s always been a good
standby here. Paul Masson also does well,” remarks Park.
Another big selling imported brandy is Metaxa from Greece.
“We’ve got to be one of the largest Metaxa customers in the
state; we have one town over with a very large Greek
population and we sell quite a bit.” Looking at Cognac, Park
underscores the diverse customer base. “It’s unbelievable
because of the demographics around us that we have a lot of
these ethnic populations and it’s amazing how each one goes
into certain segments of it.”
Park says the
Russian community in the area continues to purchase large
quantities of Cognac, particularly the Chalfonte VSOP, of
which Park goes through 24 cases every few weeks. Hennessy,
Courvoisier and Remy Martin continue to perform strongly,
and in-store tastings have elevated other brands as well.
“Pierre Ferrand has been very aggressive in doing that,
especially during the fall and winter seasons. They get a
great response because a big key to selling some of these
better Cognacs is actually getting people to taste it,”
remarks Park. “On some of the boutique brands it’s just been
very difficult for somebody to look at a fifty dollar bottle
and think, what if I don’t like it?” Park also notes that at
his store, the Cognac and brandy customer keeps getting
younger.
Over at Brix
Wine Shop in Boston’s South End, Carri Wroblewski, who owns
the store with business partner Klaudia Mally, says their
customers are still predominantly in their upper 3Os to mid
5Os. Brix usually hosts two Cognac tastings annually, and
the brands they primarily support are Pierre Ferrand, their
bestseller, and Maison Supreme. Wroblewski comments that
while her customers generally prefer their Cognacs and
brandies neat, there are a few people out there
experimenting with cocktails.
Drew Marcarelle,
who owns Marcarelle’s Package Store in Ipswich, contends
that while Cognac is not exactly flying off the shelves, it
is holding its own, depending on the time of year. “During
the holiday season, it sells pretty well,” he says, noting
that domestic ultra-luxe brandy Germain Robin seems to be
very popular. He stocks the must-have brands, such as Remy
Martin and Martell, but also smaller artisanal houses, such
as Pierre Ferrand and Michael Bonnin. Ipswich’s growing
Brazilian population buys a lot of brandy and Cognac, he
observes.
FUTURE
PERSPECTIVES
Collectively, Cognac and brandy in Massachusetts could be
poised for a promising future, depending on location and the
type of venue concerned. As with most products,
understanding your customer is key. Few people, having never
tried it, would pay a lot of money for a bottle of brandy or
Cognac regardless of how good they’re assured it is. But if
customers have an opportunity to sample it at an in-store
tasting or a restaurant or bar promotion, the sale gets much
easier. The same holds if a drinks menu is presented to
guests after their dinner, as Nicas does at The Castle. More
than just nickels and dimes, Nicas says this menu generates
close to $8O,OOO a year. Not everyone has the same
experience. “The popularity brought on by Hip-Hop culture is
purely on fashion and being chic,” says Jonas Atwood at
Meritage. “There is virtually no appreciation or awareness
of the subtle flavors, styles or singular characteristics
found in many small batch Cognacs, as evidenced by the
popularity of the larger, ambiguous brands,” he
adds.
And, although
Gary Park sells a lot of Cognac and brandy at his shop, he
expresses concern about rising prices. “I hope, as far as
price increases go, they don’t get carried away. Some of
them in the last year have started to really trickle upwards
and I hope they don’t chase people off.” Lloyd Foster also
sees things from a financial point of view. “I think people
slide up and down the scale of age, sophistication and what
have you, depending on how the economy is. If it’s really
booming they may only drink XO or one of the better Cognacs,
and if they’re wondering if they’re going to lose their jobs
tomorrow, their next bottle may only be a VSOP or
equivalent,” he says.
Moet Hennessy’s
Baez-Goss sees the slow and steady climb of Cognac
continuing “if only because consumers are much savvier in
their consumption of premium spirits. Any consumer that
experiences Cognac for the first time will know it’s a
unique experience that rivals the best vodkas of the world,”
she comments. As for domestic brandy, Justin Ames at
Christian Brothers says, “Brandy itself has got incredible
heritage. Everybody knows what brandy is so as a consumer
gets older, we see them switching to brandies.”
Brandy and
Cognac may be a more challenging sell than some other
spirits, but don’t count the category out. The romantic
mystique of Cognac and the interesting heritage of brandy,
combined with innovative promotions touting their complex
flavors, as well as Cognac’s adoption by popular culture,
will keep the category thriving. And there’s certainly more
than enough room in the crowded world of spirits like vodka,
tequila and rum for brandies of all styles to make an impact
and cash in on their own merits. Consumers who drink other
top-end spirits are eager to try new things. They already
appreciate complex tastes and aromas, and they would
probably embrace high quality brandy and Cognacs. All it
takes is a trusted gatekeeper: An enthusiastic sales person,
bartender or waiter who piques their interest and offers
them a delicious new drink that resonates with their love
for the finer things.
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Even Remy Remy Hennessy Martell The Landy’s CB |
