SNAKES, BOURBON, AND TATTOOS

How marketers are introducing an ancient spirit to modern drinkers

WRITTEN BY MARGARETT WATERBURY PHOTOS PROVIDED BY DOMAINE D’ESPERANCE

At first glance, American craft distillers and Armagnac producers don’t appear to have very much in common. Widespread, small-scale spirits production in the U.S. only dates back about 30 years (in the post-Prohibition era, at least), while some Armagnac distillers have been operating from the same property for more than three centuries. American craft distillers are animated by a spirit of exploration and unhindered by all but the most minimal limitations regarding what they can produce. Armagnac operates within a long and established tradition, with strict rules about not only where it can be made but when, how, and out of what.

And yet despite their differences, distillers in the U.S. and Armagnac share many of the same concerns, challenges, and opportunities. Most Armagnac houses are tiny, producing just a few hundred cases a year. They lack the huge marketing budgets and massive distribution networks enjoyed by legacy producers in places like Scotland, Cognac, and Kentucky, which means they, too, need to be scrappy and creative to thrive in modern markets.

All About Armagnac

Armagnac is an aged grape brandy made in Gascogne, a rural part of Southwest France. Ten different grape varieties are permitted, but in practice most Armagnacs are distilled from four different grapes: folle blanche, baco, ugni blanc, and colombard. Grapes are generally harvested early and made into low alcohol, high acid wines for distillation, which mostly takes place on a unique continuous direct fire still during a legally defined season that begins after harvest and must be completed by the end of March.

Extended maturation is pretty much the norm in Armagnac, with an enormous amount of attention paid to blending and elevage, the French practice of manipulating spirits in the warehouse. Brandies are routinely moved from cask to cask, generally from newer to older oak, to develop nuanced flavors and limit excessive extraction. Aeration, blending, and the very slow addition of water are also key components of warehouse operations. When they’re finally ready, Armagnacs are often released as age-stated blends, but vintage releases made entirely from grapes harvested during one year are also common.

Armagnac is often compared with Cognac, which makes a certain amount of sense on one level: They’re the two most prominent protected designation of origin (PDO) French grape brandies, and both are made from similar grapes in regions not terribly far apart from one another. But the structure and scale of their industries is radically different. Cognac is dominated by multinational brands that offer primarily blended products that target consistency over expressiveness and terroir — think Hennessy, Rémy-Martin, and Courvoisier. No such thing exists in Armagnac. The scale is simply too small. According to the Spirits Business, about five million bottles of Armagnac were produced in 2019. Cognac churned out 216.5 million bottles — about 43 times more. It is said that the amount of Armagnac distilled each year is less than the amount of Cognac that evaporates annually as angels’ share.

Unlike Cognac, which is popular the world over, there’s also very little established market for Armagnac. Nicholas Palazzi, owner of PM Spirits, is unequivocal about the challenges of selling Armagnac in the United States. “There’s no market for it,” says Palazzi. With relatively accessible pricing and good access to older stocks, Armagnac could offer drinkers that elusive feeling of getting a deal on something “undiscovered.” The category has begun to attract a small amount of attention from American whiskey drinkers, but it remains a niche category for connoisseurs. For Armagnac producers, just like for craft distillers, the question is how to get consumers to care enough about their product to want it. PM Spirits imports five different Armagnac brands to the United States. It’s also created a handful of its own brands focused on introducing the category to people who would never dream of themselves as French brandy drinkers to tackle just this problem.

Opening New Doors

Armagnac’s centuries-old history offers the spirit many advantages: prestige, experience, and some extremely old stocks of brandy, some dating back to the 1800s. Yet that long legacy is also a liability that keeps French brandies from becoming everyday beverages for American consumers. Nicholas Palazzi describes this as “baggage.” “People need an occasion, a snifter, maybe a candle because of the weird things they were told — you need to be by the fire, it needs to snow maybe,” he said. “So nobody drinks the stuff, because no one is just thinking about it as an alcohol that will taste good and could be drunk anytime.”

One of PM Spirits’ clients is Domaine d’Esperance, a producer in Bas-Armagnac. While the property itself has been associated with Armagnac production for a very long time, when the current owners Claire de Montesquieu and her husband, Jean-Louis de Montesquieu, bought the property in 1990, neither had any firsthand experience making brandy. After it “quickly became clear” the estate would not support them both, Jean-Louis returned to his full-time job while Claire dedicated herself to distillation. Thirtythree years might sound like a long time to American craft distillers, but many Armagnacs mature for 20 years or longer. “Armagnac

needs to age, and you will age with it,” chuckled Claire.

From the beginning, Domaine d’Esperance has focused on quality at every step of the process, including the winemaking. Because of the unique configuration of the Armagnac still, in which the vapor is in contact with the undistilled wine until nearly the last few moments of distillation, Claire felt it made sense to work with better quality wines. She now waits to harvest her grapes until they’re truly ripe, developing richer flavors in the wine. She also asks her mobile distiller to distill to a low proof — about 52-54 percent alcohol — and many products are made without further additions of water. Export markets are important for Domaine d’Esperance, including the United States, where its products are imported by PM Spirits.

In addition to representing the brand’s core expressions in the United States, PM Spirits also proposed the creation of a new U.S.-only brand called Cobrafire. The catch? It’s not Armagnac — at least, it’s not described that way on the label, which features a hip line drawing of a cobra reared up and ready to strike. The first Cobrafire expression was an unaged Armagnac, a category called blanche d’Armagnac in France but marketed as eau de vie de raisin in this case, bottled at a still strength of 51.3 percent ABV.

Why sell a product that meets all the requirements of Armagnac as something else in a bottle that wouldn’t look out of place tucked into the saddlebag of a motorcycle? Because it helps open new doors. “Armagnac is not well-known, and blanche d’Armagnac is even less so,” said Palazzi. “So trying to peddle something that nobody knows about, and nobody cares for, in a bar that doesn’t look like anything, is kind of an uphill battle.” Most Armagnac is sold in very traditional bottles covered in French words, perhaps with no graphics at all, or perhaps with an old-fashioned etching of a chateau or maison on the front. That’s not a very meaningful look for many English-speaking American consumers, and it can come across as stodgy or snobby rather than inviting.

Rather than asking consumers to already know everything about the various complexities of Armagnac — to have “a Ph.D. in French,” as Palazzi puts it — before they can understand a label or feel invited to enjoy a bottle, Cobrafire is taking the opposite approach. “It looks cool, somebody tells you it tastes good, you taste it, and there’s a high chance you’re going to like it. It decomplexifies the drinking experience.” The product has been a success, developing enough of a fan base to launch a second expression, Cobrafire Evil Force, an aged Armagnac containing casks between six and 20 years old and sold as “cask strength brandy.” And after consumers have decided they like it? They might be inspired to learn more about Armagnac, including Domaine d’Esperance, which produces the spirit in that snake-y bottle.

Another PM Spirits-created label designed to introduce Armagnac to American drinkers is the L’Encantada Tattoo series, which finishes Armagnac in ex-bourbon barrels from Kentucky’s Willett Distillery. That extra finishing step means it loses its appellation d’origine contrôlée (AOC) status, so it’s described on the label as “Grape brandy finished in ex-bourbon casks.”

“If you’re a bourbon drinker who knows nothing about brandy, or you’re not necessarily interested, here’s something that could be a bridge between you and Armagnac and brandy in general,” said Palazzi. Chateau de Laubade, a producer in Bas-Armagnac, has also begun collaborating with Bardstown Bourbon to supply casks for a series of Armagnac-finished Bardstown Bourbons, the first release of which won best in class for finished bourbons at the San Francisco World Spirits Competition.

So, what are the lessons for craft distillers? First, remember that while formal categories, rules, tradition, history, and geographic designations remain important within the industry and shape much of how it operates, consumers don’t necessarily know or care anything about them. Rather than wring your hands about that, see it as an opportunity to give consumers a new experience, free from preconceptions.

“There are a million brands that pay to be on back bars. We’re competing with that with no money, no brand power, the category is dead, people know nothing about it, so we need to first get them to try the product. We tell the story once a person has accepted the offer to taste the stuff,” said Palazzi. While he’s talking about Armagnac, the same sentiment applies to small craft distillers making all kinds of products.

Second, no matter how compelling your personal or brand story, the consumer is always the protagonist of their own story. If your key marketing messages are all about you and how great you are, consumers will tune out. “It’s about the customer,” said Palazzi. “It’s not about you. You’re competing for the customer’s attention. If you start with a first-person approach that’s all about you, you’ve lost the icture this: After many years of running a successful distillery, you and your business partner have come to a crossroads in your professional relationship. It’s time to part ways. You’d like to buy your partner’s share of the business, but you’re unsure how to go about it. Securing the funds for a business partner buyout has been a common hurdle for many — until a few years ago. The Small Business Administration (SBA) adjusted their business partner buyout financing rule in April 2018, and now offers a loan product with partner buyouts in mind — ultimately benefiting all parties involved in the transaction. To understand why the SBA’s business partner buyout loan can be advantageous, we need to step back for a moment.

SMALL BUSINESS ADMINISTRATION 7(A) LOANS

Let’s start with a quick overview of what the SBA is. The Small Business Administration is a government agency that serves as the main resource for government-backed business loans. A portion of SBA loans is guaranteed by the government and these loans allow small business owners to obtain capital with less equity than a conventional loan requires. To clarify, the federal government does not lend you the money, the bank does. The SBA just guarantees a percentage in the event of a default on the loan. The SBA 7(a) loan is the most common SBA loan product, offering flexibility on terms and business uses. These loans can be used to set up a new business, assist in an acquisition or expansion of an established business or buyout a partner. There are many benefits of SBA loans, and the specific terms can be negotiated between the borrower and an SBA-approved lender. When considering an SBA loan, it’s ideal to work with an SBA Preferred Lender (PLP). PLP status with the SBA gives lenders authority to make final credit decisions without having to get SBA approval and is typically a sign that the lender has more experience with SBA loans, resulting in a smoother, faster process.