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American Brandy’s Upscale Ambitions

January 31, 2022

Though most American brandies are in the affordably priced tier, the higher end of the category is beginning to show a resurgence, with investment coming from major distillers and craft players. As with the overall category, where Gallo’s E.&J. brand leads the field with volume of 2.9 million cases, according to Impact Databank, the company is taking the lead at the higher end with its Germain-Robin label. Since purchasing the brand in 2017, Gallo has reintroduced Germain-Robin to consumers with limited edition offerings and new packaging.

Gallo opened the California Brandy House in Napa in 2020 as a showcase for its luxury brandies, including Germain-Robin and Argonaut. “We chose the heart of California’s wine industry to introduce California brandy to wine consumers, who overindex with brown spirits appreciation,” says Britt West, vice president and general manager of the spirits division at E.&J. Gallo. “The tasting room and bottle shop is dedicated to California brandy, and it has exceeded our expectations for bottle purchases by 2.5 times.

“We reintroduced Germain-Robin with the continuation of XO ($125) and a new expression, Germain-Robin brandy ($75), which encompasses the house style, in late 2019,” West continues. “While there was a slow start to the introduction due to the pandemic’s impact on the on-premise, we saw it really gain traction within the last 12 months. Sales nearly doubled in that timeframe, with a pickup on-premise, as well as from longtime supporters of the brand in retail, particularly in California.” Looking ahead, Gallo plans to double down on consumer education to make up for the time lost due to the pandemic. The company also has two new single-barrel offerings planned for Germain-Robin.

Beyond E.&J. Gallo’s substantial investment in higher-end American brandies, craft expressions like those from Louisville, Kentucky’s Copper & Kings—acquired by Constellation for an undisclosed sum in 2020—and legacy brands like Laird’s are developing fan bases, according to Flavien Desoblin, owner of The Brandy Library in New York City.

He sees Gallo’s investment in Germain-Robin as a potential tipping point for the luxury tier, but also feels there’s room for more locally focused producers to carve their own niches. “A lot of craft distillers are trying to tap into their local roots,” says Desoblin. “If there are peaches or pears or apples–whatever is in the rural farming history of their region, they’ll capitalize on it. So you see a lot of brandies made out there in various areas, but they usually just stay within the confines of that region.”

Though the high end of American brandy is in its nascent stage, Desoblin sees solid potential for the category if distillers can draw in the right clientele. “It takes quite some time to convince consumers that brandy is a cool thing,” he says. “People aren’t ready to take brandy as a great product and dive straight into it. It’s only because of this new under 40-year-old clientele that’s just so curious and ready to try anything that brandy is being rediscovered.”

West agrees that there’s an opportunity to leverage this exploratory bent among younger consumers. “One of the remarkable things about the past two years has been the exploration we’re seeing in brown spirits: dark rum growth, whiskies from around the world, and certainly Cognac,” he says. “Luxury brandy sits at the intersection of this trend, but it’s not a trend that just any supplier can jump on. Opportunity is colliding with consumer interest. Our aged inventories in barrel are unique in the domestic brandy space and allow us to deliver unparalleled expressions for the brown spirits explorer.”

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