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Cognac Extends Its U.S. Gains As New Consumers Enter Category

December 19, 2019

Cognac continues to be a key growth driver in the U.S. spirits market, with volume projected to top 6.4 million cases on a 5.5% increase this year, according to Impact Databank. In value terms, Cognac exports to the U.S. have nearly doubled since 2014, reaching €1.2 billion ($1.3b) last year, according to the Bureau Interprofessionel du Cognac.

At the forefront is Hennessy, which holds a roughly 60% share of the Cognac market in the U.S. and will approach 4 million cases this year. The Moët Hennessy brand has accelerated in 2019, with volume up 6% in control states in the year-to-date through October. Hennessy senior vice president Giles Woodyer tells SND that the entry-level Hennessy VS continues to reach new heights, recruiting consumers into the category.

Woodyer says Hennessy’s Le Voyage experiential platform, aimed at educating consumers on cocktails and the production process, is connecting, and adds that the brand is currently growing faster on-premise than in retail accounts. “New ideas within the category will drive Cognac into the future, including offerings that change the perceptions of what Cognac has been, from higher proofs to changing traditional flavors,” Woodyer observes.

Rémy Martin, the U.S. market’s second-ranked Cognac brand by volume at over 900,000 cases, exited the lower-priced VS segment in 2016 and has since homed in on its VSOP ($40)—which accounts for the majority of volume at around 600,000 cases—1738 Accord Royale ($50-$60), and XO ($150-$160). In Rémy Cointreau’s fiscal first half ending in September, Rémy Martin saw a 2.1% increase globally to €379.6 million ($424m). The company noted that “a fall in tourism in Hong Kong and slow stock replenishment by retailers in the United States” held back growth during the period. Rémy Martin’s volume dipped 6% in control states in the 10 months through October.

Beam Suntory-owned Courvoisier ranks third in the category at just above a half-million cases. Earlier this year Courvoisier launched Master’s Cask Collection Sherry Cask Finish ($40) in the U.S. following positive reception to a similar expression in Europe. “We’re seeing increased interest in unique finishes, and we’re the first leading Cognac house to release a Sherry cask-finished expression,” says marketing director Stephanie Kang.

Bacardi is also on the move in Cognac with its d’Ussé brand, which surged to above 300,000 cases last year and recorded 21% growth in control states in the first 10 months of this year. “The super-premium Cognac segment, where d’Usse VSOP lives, and the prestige Cognac tier, where d’Usse XO sits, are forecast to grow dramatically in the next few years and beyond,” says brand vice president Jennifer Pisciotta. To that end, the brand is focused on building a wide consumer base for its VSOP, while highlighting XO as an aspirational trade-up.

Martell, part of the Pernod Ricard portfolio, likewise continues to climb, topping 200,000 cases last year and jumping by 16% in NABCA channels this year through October. A number of smaller brands are also playing a role in the category’s U.S. growth, among them Camus (now above 25,000 cases), Pierre Ferrand, Hine, and Delamain.—Julia Higgins

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