Hennessy Following Up Banner Year With Continued Expansion In 2016May 26, 2016
Hennessy recently celebrated its 250th anniversary, but the Cognac brand is growing so quickly in the U.S. market that its performance resembles that of a hot new product.In 2015, Hennessy advanced by 18% to surge past the 3-million-case threshold, according to Impact Databank. And the Moet Hennessy USA brand isn’t slowing down this year.
Through the first quarter of 2016, Hennessy VS—which accounts for the lion’s share of the brand’s business—was up by 29% in NABCA markets. For the 16 weeks ending April 17, Hennessy VS grew by 15% in Nielsen channels.
VS isn’t the only Hennessy marque that’s thriving. “2015 was also a fantastic year for Hennessy VSOP, XO and luxury products like Imperial,” says Giles Woodyer, senior vice president, Hennessy at Moët Hennessy USA. “While VS is enjoying double-digit growth, the higher marques are actually gaining brand share, and we see considerable growth opportunities for the high end.”
Hennessy has sparked a Cognac renaissance in the U.S. Category shipments rose by 13.5% in 2015, according to Cognac trade group BNIC. While competitors like Remy Martin, Martell and d’Usse have also been on the rise of late, Hennessy’s category share continues to grow more dominant, nearing 70% in 2015 (up from 61% three years prior). Still, the Cognac leader is clearly attracting consumers not just from within its own category, but also from others—brown and white spirits alike.
“Without a doubt, we’re bringing in consumers from other categories,” says Woodyer. “A significant portion of consumers drinking white spirits a few years ago have come over to Hennessy—or we’ve been part of their repertoire in the past and are now in the forefront. And we’ve attracted consumers of other brown spirits as well.”
Woodyer credits Hennessy’s “Never Stop. Never Settle” marketing campaign—launched in 2012—and the Cognac’s affiliation with rapper Nas as key to connecting with new consumers. “We’re really excited about the brand’s growth among Millennials,” he says. “The marketing campaign has shown them a brand that’s incredibly vibrant.” He adds that Hennessy is gaining popularity with female drinkers, and that he sees much promise there.
The on-premise is another key growth avenue, Woodyer adds. “Cognac is still a specialty product in bars and restaurants, so there’s plenty of upside in the on-trade channel,” he says. “I think we’re only at the tip of the iceberg in the on-trade, and we definitely feel the right seeds have been sown there. Additionally, we’re now seeing a massive increase in Cognac cocktails in bars across the country.” Woodyer says on-premise and off-premise growth rates have been roughly parallel over the past few years.
Even after advancing by some 750,000 cases over the past two years, it appears as though Hennessy still has plenty of room for growth.
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