COGNAC AND BRANDY
A new life for an old spirit Cognac and brandy are products that truly encapsulate what premiumisation means, but as Andy Young discovered, there is now a lot more to these magnificent old drinks.
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ognac and brandy are enjoying consistent growth in Australia at the moment, with Cognac sales of around $35 million a year and 281,000 litres, which actually equates to just a 0.9 per cent share of total glass spirit sales. For brandy total sales are currently at around $74 million and 1.4 million litres, which is around two per cent of total spirit sales. So less than three per cent of total spirit sales are currently taken by Cognac and brandy and what that adds up to is that there is tremendous potential for Cognac and brandy to enjoy strong growth and increase that share of total spirit sales. According to IRI Cognac enjoyed double digit dollar growth last year of 14 per cent and volume growth of 8.3 per cent, which compares to overall category growth of 3.6 per cent and two per cent respectively. That mirrors the global trend for Cognac, which has seen exports grow for four consecutive years, most recently rising by 5.4 per cent in value and 8.2 per cent volume according to the Bureau National Interprofessional du Cognac (BNIC). In the 12 months from 1 August 2017 to 31 July 2018, by value the turnover from Cognac exports reached 3.2 billion, accounting for nearly a quarter of the total value of exported French wines. While the United States remains by far
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the largest market for Cognac, emerging markets including Oceania and areas such as South Africa, Vietnam and the Caribbean, achieved an increase of 5.3 per cent in value and 12.2 per cent in volume. The BNIC said that together, these new areas of opportunity represent more than 6.7 per cent of global volumes shipped, or nearly 13.9 million bottles. Valeria Catterini, Marketing Manager for Champagne and Cognac with Pernod Ricard Australia, explained what the company, which owns Martell, believes is behind the growth being seen in Australia. “There are several factors that can be attributed to Cognac category growth in Australia,” Catterini said. “The changing demographic of Australia continues to see an increase of people with Chinese heritage. Cognac is more ingrained in their consumption habits in China and this has carried through into Australia. “We are also seeing increased interest from mainstream retailers as premiumisation and craft trends have taken off in the Australian market.” She adds: “The rich heritage and craft of Cognac is becoming increasingly appealing as consumers are looking beyond established categories, such as whisky.” Matt Redin, Marketing Manager for St Agnes Australian brandy, agrees that the premium nature of the category is helping to fuel growth.
“For St Agnes Distillery our growth is all being driven at the premium end of the market. While our entry level VS is holding its own, against a raft of cheap direct imports, from our VSOP up through super premium St Agnes XOs we are seeing solid growth across all channels.” As far as brandy, and particularly Australian brandy is concerned, Fred Siggins, Strategy Manager at Sullivans Cove says there is another factor at play. “Australia has been producing brandy for well over 100 years, but with the growth in craft distilling and renewed interest in locally produced spirits, it follows that consumers would be taking a second look at brandy,” he said. “We do expect brandy to grow more in 2019 as both on and off-premise retailers along with craft producers continue to breathe new life into the category.”
MAKING THE MOST OF THE TREND So with the trend and the reasons behind it established, what can retailers do to make sure they are making the most of what Cognac and brandy have to offer? For James France, Founder of Vanguard Luxury Brands, which distributes Hine Cognac in Australia, it’s a straight-forward point of “knowledge is key”.
