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Despite Supply Issues, Cognac Continues To Gain Ground In The U.S.

August 20, 2019

While supply issues have been constraining Cognac’s U.S. growth to some degree, the category continued to post impressive gains in the year through June. According to the Bureau National Interprofessionnel du Cognac (BNIC), shipment volume to the North American market increased 6% over the past 12 months, while export value surged 14% to €1.41 billion ($1.6b). In the calendar year to date through June, shipments to the U.S. were up 11.3% to 3.9 million 9-liter cases, and value leapt 23.6% to €735.4 million ($825m).

The U.S. is by far the world’s largest Cognac market, surpassing 6 million cases for the first time in calendar 2018, according to Impact Databank. Hennessy now holds a market share of more than 60%, and combines with Rémy Martin to account for nearly three-quarters of U.S. consumption. But the two brands were headed in opposite directions in control states during the first half of this year, with Hennessy up 5.8% and Rémy Martin down 4%.

Cognac’s strong U.S. growth has also led other marketers to redouble their efforts. Martell, part of the Pernod Ricard portfolio, saw a 38% increase in control states in the first half, while Bacardi-owned d’Ussé jumped 13%. Courvoisier also posted growth in NABCA channels through the first six months of the year, rising 6.5%. Beam Suntory CEO Albert Baladi recently told SND that Courvoisier’s upward momentum has continued despite a price increase on the brand earlier this year.

Globally, Cognac shipments rose by a modest 2.6% in the 12-month period ending in June, reaching 16.4 million 9-liter cases, according to the BNIC. Global turnover was more impressive in that 12-month period, gaining 6.8% to €3.4 billion ($3.8b). Overall, Cognac accounts for nearly one-quarter of France’s global wine and spirits exports.

In response to the supply issues that have hampered growth for Hennessy and other brands, the BNIC has approved a plan to add 10,000 hectares (24,710 acres) of new vines to Cognac’s territory over the next three years. Once those new vines are planted, the Cognac vineyard will reach a total of 86,000 hectares (212,510 acres) compared to the current 76,000 hectares (187,800 acres).—Juan Banaag

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