Cognac Weathers Tough Conditions, Aims For A Rebound

After soaring to an all-time high of 8.5 million case depletions amid the pandemic in 2021, the Cognac category saw volume decline sharply in 2022 and 2023, with depletions estimated at just over 6 million cases last year, according to Impact Databank. Cognac has suffered due to consumers shifting to the Tequila category over the past two years, as well as from cautious spending among its core African-American demographic owing to economic conditions. Still, key category players view the downturn as more cyclical than structural, with an improving trend expected looking ahead, especially against the easier comps from last year.

Market leader Hennessy is estimated to have slipped 6.1% to 3.5 million cases in the U.S. last year, according to Impact Databank, down from 5.1 million cases in 2020, when consumers stocked up during the initial outbreak of the pandemic. While Moët Hennessy has said the brand is being “affected in the United States by the economic environment, the post-Covid normalization of demand, and the continued high inventory levels of its retailers,” it has outperformed the category in volume terms in control states lately. Despite the recent decline, Hennessy remains one of only three spirits brands with U.S. retail value of above $2 billion, along with Tito’s and Crown Royal.

Second-ranked Rémy Martin, with U.S. volume of approximately 1 million cases, is continuing to pursue its value-based strategy, and will leverage its 300th anniversary this year to boost visibility. “On-trade represents a significant growth opportunity,” Rémy Cointreau Americas CEO Nicolas Beckers recently told SND. “While we’re seeing growth in lodging and casinos, the biggest opportunity lies in nightlife, where we plan to accelerate our investments as part of the 300-year anniversary celebrations with XO. Our focus will remain on continuing to build our higher-end marques in the on-premise, and we’ve established a dedicated luxury team to further develop this channel.”

The Cognac category got a boost of confidence last month when Campari agreed to pay up to $1.3 billion for the Courvoisier brand, acquiring it from Beam Suntory. Courvoisier ranks fourth in the U.S. Cognac market at around 600,000 cases, representing about half its global volume. “In what is the biggest deal in Campari Group’s history, Courvoisier will enable a significant step up in the U.S. while also permitting long-term transformational potential in the strategic Asia-Pacific region,” said incoming Campari CEO Matteo Fantacchiotti. Campari plans to relaunch Courvoisier looking ahead in a bid to accelerate growth.

Bacardi-owned D’Ussé vaulted into third place in the category on a steep growth curve from 2015-2021, reaching 870,000 cases before falling back some in line with the tougher conditions the past two years. Bacardi acquired a majority interest in the multi-billion-dollar brand from partner Shawn “Jay-Z” Carter early last year, with Jay-Z retaining a significant ownership stake. “D’Ussé VSOP continues to be the brand’s key sales driver,” says global vice president of marketing Jennifer Pisciotta, “but as premiumization continues and consumers look for elevated sipping experiences and more complex liquids, there is continued interest and appetite around XO.”

Pernod Ricard is likewise active in the category with Martell, which has U.S. volume of around 200,000 cases. Martell has looked to draw in new consumers with its Blue Swift offering, a VSOP Cognac finished in Bourbon barrels. “The U.S. remains a top priority, and despite lingering category softness, our outlook is optimistic as we continue to deliver against our ambition to outpace competitors,” says brand director Cheryl Cavanaugh.

Tagged : Bacardi, Beam Suntory, Campari, Courvoisier, D’ussé, Hennessy, Martell, Pernod Ricard, Remy Cointreau, Remy Martin

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