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Hennessy On The Rise In The U.S., Despite Cognac’s Global Slowdown

October 21, 2014

Although Cognac has lost a little steam in the U.S. lately—decelerating from 2.8% volume growth in 2012 to a 1.9% advance last year, according to Impact Databank—category leader Hennessy has managed to stay ahead of the curve. In 2012, Hennessy was up 3.5% in the U.S., and last year the brand tacked on a 4.5% gain, reaching more than 2.3 million cases. Hennessy’s progress has extended into 2014, with Moët Hennessy recently reporting that the flagship Cognac showed “excellent momentum in the United States” over the past nine months through September.

Hennessy’s ongoing success in the U.S. has been fueled in part by an aggressive marketing strategy, including its comprehensive “Never Stop. Never Settle” campaign, launched last year. This year’s iteration of the campaign, which is targeted toward young LDA consumers, featured a partnership with hip-hop artist Nas, as well as a nationwide mobile tour showcasing the achievements of English motorist Sir Malcolm Campbell, among other initiatives. The brand has also put significant emphasis on attracting Hispanic-American consumers, one of the U.S. market’s fastest-growing demographics.

“Mexico is among the biggest markets for Hennessy, and Cognac actually has a long history in the market, dating back to the Mexican Revolution,” says Moët Hennessy USA senior director of multicultural Manny Gonzalez, adding that Hennessy, in particular, has become a gift-giving staple for Hispanic drinkers. “In the U.S., we’re reaching out to bicultural Hispanic consumers.”

Along with its robust marketing program, Hennessy’s U.S. strategy has focused heavily on innovation, particularly at the high end. Earlier this year, Hennessy unveiled its latest Limited Edition VS label ($30-$32 a 750-ml.), featuring a bottle design by artist Shepard Fairey, as well as a new entry in its Privilege Limited Edition VSOP series ($50-$60). At the ultra-luxury level, the brand recently debuted its Hennessy Edition Particuliere, a blend made with eaux-de-vie more than a century old. Only 11 bottles of Edition Particuliere were made available in the U.S. market, priced at $27,000 each.

Hennessy’s stateside surge comes as the global Cognac category faces upheaval. The segment has been hit particularly hard by a slowdown in China, where a government crackdown on luxury entertaining has dramatically impacted high-end spirits sales. According to Impact Databank, China’s Cognac market fell 19% to 1.5 million cases last year. As a result, industry players are shifting their attention back to the U.S., which remains Cognac’s largest market by volume at close to 4 million cases.

 

 

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