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Cognac On Pace To Hit Major Milestones In U.S. Market This Year

October 10, 2016

Heading into the spirits market’s crucial holiday selling period, the high-flying Cognac category shows no signs of slowing down. Shipments of Cognac to the U.S., by far the global category’s largest market, crossed the 5-million-case mark on 13.5% growth last year, driven by the double-digit progress of Hennessy, Rémy Martin and Martell. Depletions rose even faster, advancing by nearly 15% to 4.7 million cases, according to Impact Databank. Over the past two years, Cognac depletions in the U.S. are up by nearly 1 million cases, while shipment value has leapt 54% to €942 million ($1.05b). With growth continuing in 2016, U.S. depletions could hit 5 million cases and value could cross €1 billion ($1.1b) by year-end.

Hennessy continues to dominate the category, accounting for 44% of worldwide volume and 66% of the U.S. Cognac market. With its global volume expanding by 55% since 2005, to 6 million cases, Hennessy has risen to become the world’s third most valuable spirits brand by retail sales, at $3.5 billion (trailing only Johnnie Walker and Smirnoff). “A significant portion of consumers drinking white spirits a few years ago have come over to Hennessy,” says Giles Woodyer, senior vice president, Hennessy at Moët Hennessy USA. Rémy Martin remains a distant second to Hennessy in the U.S., but it too has been on an impressive run. In the 12 months through June, Rémy Martin posted a 15% increase in U.S. depletions, and in the first half of this year the brand’s VSOP jumped 20% in IRI channels.

Martell, which neared 100,000 cases in the U.S. last year, is getting increased focus in the market. Brand-owner Pernod Ricard is looking to leverage robust trends in both Cognac and Bourbon with a new hybrid product, Blue Swift ($50), which was finished in Kentucky Bourbon barrels. Bacardi’s d’Ussé brand has also been making strides. Thus far in Bacardi’s fiscal year (beginning in April), d’Ussé’s revenues are up 20% compared with last year, led by its VSOP quality ($50). Meanwhile, senior brand manager Tyler Phillips tells SND that d’Ussé XO ($230), which continues to expand into new markets, is growing exponentially from a small base.

Beam Suntory’s Courvoisier brand sells about one-third of its volume in the U.S. market. “The Cognac category comprises about 4% of all spirits by dollar value in the U.S., according to Nielsen, but it’s growing at 19%, compared with total spirits category growth of 6%,” says Halley Kehoe, Beam Suntory’s marketing director, lifestyle brands. “The whiskey renaissance has inspired greater consumer interest in brown spirits, specifically among multicultural millennial males. They’re looking for premium brands that project success and sophistication, and so Cognac is well-positioned to recruit them.” —Daniel Marsteller

U.S. – Top Seven Cognac Brands
(thousands of nine-liter cases)
Rank Brand Importer 2012 2013 2014 2015 Percent
Change1
2014-2015
1 Hennessy Moet Hennessy USA (LVMH) 2,230 2,330 2,610 3,080 18.0%
2 Remy Martin Remy Cointreau USA 670 620 654 765 17.0
3 Courvoisier Beam Suntory 415 410 446 448 0.6
4 Martell Pernod Ricard USA 67 64 74 99 33.4
5 Salignac Beam Suntory 90 104 98 90 -8.0
6 d’Usse Bacardi USA 3 18 55 58 6.0
7 Ansac Heaven Hill Brands 37 36 36 35 -3.5
Total Top Seven 3,512 3,582 3,973 4,576 15.2
Other Brands 117 100 88 81 -7.4
Total Cognac2 3,629 3,682 4,061 4,657 14.7%
1 based on unrounded data
2 addition of columns may not agree due to rounding

Source: IMPACT DATABANK

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