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Cognac Sees Renewed Growth In U.S., As Asian Demand Dries Up

January 12, 2015

Only a few years ago it was commonplace to hear that Cognac producers were holding back stocks formerly destined for the U.S. to sell at higher prices in China. These days, with government austerity measures in China taking a toll on the country’s high-end wine and spirits market, the Cognac category has refocused on the United States, and its key players are showing impressive growth.

After registering a lackluster 1.5% volume advance to 3.7 million cases in the U.S. market in 2013, according to Impact Databank, Cognac’s progress has accelerated markedly over the past year. The category was up 12% in IRI channels in the 52 weeks through December 28, and rose 11% in control states in the 11 months through November.

Much of Cognac’s recent U.S. growth has come from category leader Hennessy, which has continued to build off its 2013 base of 2.33 million cases, increasing by double-digits in both IRI and NABCA data. Second-ranked Rémy Martin and third-ranked Courvoisier, meanwhile, each appear to have reversed their 2013 U.S. declines last year, rising 18% and 15% respectively in IRI channels in the year through December 28 (although their control state increases were less dramatic). Fourth-ranked Martell—which prior to the downturn in China became the first imported spirits brand to reach 1 million cases in the market—is also showing notable progress in the U.S., jumping by nearly one-third in control states in the year through November.

Hennessy and Courvoisier have both benefited from solid advances for their respective V.S. Cognacs, each retailing at $30 a 750-ml. “Courvoisier has shown strong share growth this year, particularly from our flagship V.S.,” Claire Richards, director of world whiskies and Cognac at Beam Suntory told Market Watch magazine in late 2014. Rémy Martin too is enjoying strength with its core offerings. “We’re seeing continued momentum behind our key marques, especially 1738 ($50) and VSOP ($40),” says Emma Medina, vice president for the brand’s V.S., VSOP, V and 1738 expressions.

While current Cognac consumption in the U.S. remains below its peak of nearly 3.9 million cases, achieved in 2007, the category has now seen positive U.S. growth for four straight years, and is clearly headed in the right direction.

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