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Cognac Shipments See Their Growth Rate Ease As Demand Outpaces Supply

November 20, 2018

After four consecutive double-digit annual gains, supply constraints have slowed Cognac’s growth somewhat in the United States, as year-to-date shipments through September are up just 6% in volume terms, according to the Bureau National Interprofessionnel du Cognac (BNIC). The U.S. is by far the world’s largest market for Cognac at 6 million cases, and is led by Hennessy, which remains roughly four times the size of its nearest competitor, Rémy Martin.

Total Cognac volume was up only 1.8% in control states year-to-date through September, and rose by 3.3% in IRI channels in the 52 weeks through October 7. Both Hennessy and Rémy Martin have slowed in IRI and control states so far this year, with Hennessy down 1.4% and Rémy up 5.7% according to NABCA. Still, Hennessy is poised to surpass 4 million cases in the U.S. market by year-end for the first time, according to Impact Databank, owing to its ongoing strength in the on-premise and the expectation of robust holiday season sales. Among other key brands, Courvoisier grew 10% in control states from January-September, while d’Ussé was up an impressive 63%, albeit from a smaller base.

Hennessy is looking to address supply issues with its new 280,000-square-foot Pont Neuf facility that will allow it to produce around 10 million cases annually by 2020, up from 7 million cases currently. “We’re continuously improving and building our supply development efforts, including expanded relationships with growers, new plantations, and strategic investments,” such as the Pont Neuf site, notes Giles Woodyer, senior vice president for Hennessy at Moët Hennessy USA.

Cognac shipments advanced 5.5% worldwide in the 12-month period ending in October, to 206.5 million bottles. 2018 is expected to mark the first calendar year in which annual volumes will surpass the 200-million-bottle mark worldwide. Global turnover recorded a solid 3% increase over the past 12 months, to €3.23 billion ($3.7b), according to the BNIC.—Juan Banaag and Daniel Marsteller

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