Cognac’s Leading Players Plot Category Rebound

Cognac has seen its share of challenges lately, impacted not only by slower drinks consumption overall but also a marked migration of consumers toward Tequila, which continues to attract more multicultural fans. This year, total Cognac depletions are expected to register around 5.1 million cases in the U.S., according to Impact Databank, down from 6.8 million cases in 2019, and a high-water mark of more than 8 million cases in pandemic-influenced 2020.

Amid the upheaval, Cognac’s top marketers have been responding to the challenge, with top-ranked Hennessy revamping its VS bottling to attract new consumers, and second-ranked Rémy Martin dialing up its celebrity marketing via its partnership with entertainment icon Usher while leveraging more VSOP sales in its product mix.

Market leader Hennessy has weathered the storm relatively well this year, declining only 3% off-premise, outperforming the market, after declining by 2 million cases from 2020-2023. “The long term is about how Hennessy can continue to be its authentic self and continue to connect with the consumer,” Moët Hennessy North America CEO Chris Gabaldon told SND. “In September we launched a limited edition in collaboration with LeBron James, and demand has exceeded expectations. We also just launched the ‘Made For More’ campaign.”

In the short term, brands are leveraging the breadth in their portfolios to address more drinking occasions. “Our strategic approach in the long run is in the upper range with Rémy Martin 1738, XO, and of course Louis XIII,” notes Rémy Cointreau Americas CEO Nicolas Beckers. “Having said that, we will need to leverage VSOP volumes to invest in the upper grades and in the value strategy.”

Bacardi-owned D’ussé has been tapping events and influencers to continue to raise its profile. “We’re continuing to tap into our roots in music and entertainment, including our ongoing presence at culture-driving festivals such as Rolling Loud and the new D’ussé Cognac Club at the newly-opened Intuit Dome in Los Angeles,” says Jennifer Pisciotta, global vice president for D’ussé at Bacardi Ltd.

“Cognac has faced some category specific headwinds, including share losses to Tequila and a shift in consumer appetite for more daytime and earlier evening consumption occasions,” says Melanie Batchelor, managing director at Campari America, which counts Courvoisier Cognac among its brands. “What we’ve seen over the past three years is Cognac brands seeking ways to respond to those shifting consumer needs—targeting more accessible luxury moments and new drinking occasions.”

As marketers look to shore up the category’s base, they’re also going on offense, aiming to attract new audiences. “African Americans comprise the largest share of Cognac consumers in the U.S., though there is opportunity to broaden its appeal further by recruiting from other categories, including whiskey,” says Cheryl Cavanaugh, brand director for Martell Cognac at Pernod Ricard USA.

At Hotaling & Co., CMO Brian Radics sees cocktails as a way to make inroads with new consumers, with the H by Hine label blended specifically for mixology. “Cognac can be used as a substitute for whiskey,” he notes. “Hine very much believes cocktails are a way forward.”

Taking the long view, marketers are cognizant that spirits brands and categories often move in and out of favor, and the current downturn is cyclical in nature. “Our outlook is optimistic as stock level corrections turn around,” says Cavanaugh at Pernod. “Producing and selling Cognac has always been about anticipating the long term and we have faith in the resilience of the category and its ability to bounce back.”

Tagged : Bacardi, Campari, Courvoisier, D’ussé, Hennessy, Hine, Hotaling & Co., Martell, Moet Hennessy, Pernod Ricard, Remy Cointreau, Remy Martin

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