Cognac and Brandy: On the cusp of a revolution

On the cusp of a revolution

The Cognac and brandy category is evolving to appeal to wider demographics, dismantling the misconceptions of its past and readying for an explosive future.

In an increasingly busy liquor retail landscape, different categories and segments are jostling to be recognised by consumers as unique.

For the Cognac and brandy category, this uniqueness includes a rich history which stretches back to roots in the 16th century, when Dutch traders reportedly experimented with ways to make their wine last longer on the journey from France.

Today, the grape-based spirits that form the Cognac and brandy category have a different identity – one that heroes the special qualities of the diverse category. With denominations including VO (very old), VS (very special), VSOP (very special/ superior old pale), XO (extra old) and more, a multitude of different kinds of products demonstrate the breadth of profiles and palates available in the category.

According to Emmanuel Conde, Brand Ambassador at Cerbaco (which imports and distributes a range of Cognac and brandy in Australia), this is a secret to the category’s success.

“Cognac is made from grapes, and offers a wider flavour profile compared to grain based spirits. Brandies can be made from any fruits and again, the spectrum of flavours is immense. More and more people are appreciating this. Brandies are on the high, and Cognac is leading the show,” Conde said.

This diversity is proving a hit with consumers worldwide too, as Cognac exports rose by 31.8 per cent in value last year. According to the Fédération des Exportateurs de Vins & Spiritueux de France, French spirit exports overall increased by 12.4 per cent in volume to 54.5 million cases, led by Cognac. This is a significant change to 2020, when French spirit exports fell by 19.4 per cent during the start of the pandemic.

But its not just the French side of the category that is performing well, with international brandy producers reporting growth too.

One such producer is Australia’s St Agnes Distillery, originally established in 1910, which has built a reputation as Australia’s most highly awarded brandy and South Australia’s oldest continually run craft distillery. Matt Redin, Marketing Manager for Angove Family Winemakers (which operates the distillery), said the St Agnes brand has seen some great growth being driven by its continued recognition with trophies, awards and medals across the world.

For so long St Agnes stood alone in the category as the premium leader, I hope other distilleries can show the patience we have by not releasing their spirits too young and raw.

-Matt Redin Marketing Manager Angove Family Winemakers

“A string of high-profile awards has seen the sales of St Agnes XO luxury brandy surge to new levels,” Redin explained.

There are several other elements driving the performance of Cognac and brandy as a whole too, which will be explored in this feature. The way these elements play out in the coming year will help answer a question that many are asking about Cognac and brandy right now – is it set for a renaissance?

A finite resource

St Agnes Distillery has had some big successes in the international awards circuit recently, especially for the St Agnes XO products. Redin said demand for these types of products is increased by the age factor, making them truly special additions to consumers’ home bar collections right now.

“St Agnes is in the enviable position of having such wonderful aged stocks but they are a finite resource and need to be managed well to ensure we can continue to supply for many years ahead,” Redin said.

The role of premiumisation

The ever-present trend of premiumisation has been influencing the Cognac and brandy category for years, and 2021 was no exception.

“Premium is certainly driving the market with demand outstripping supply for our St Agnes XO and VSOP brandy. We are seeing this not only with St Agnes Brandy but also other sprits we import and demand from our customers for more premium offerings shows no signs of abating,” Redin said.

For Holly Klintworth, Managing Director and Head Distiller at Bass & Flinders Distillery on the Mornington Peninsula, premiumisation is manifested in a couple of different ways in the category.

“Firstly yes, there’s been a strong trend towards people choosing to drink higher quality spirits, and even towards the end of 2021 when we had reached lockdown fatigue, to switch out the lower priced higher volume habits for more premium choices,” she said.

“Secondly, we have certainly felt an even stronger shift towards supporting local due to the freight and supply issues felt locally and internationally. I think Cognac and brandy drinkers alike are now more open than ever to discovering locally produced brandy.”

However, its not just the premium end of the scale that is contributing to great Cognac and brandy results. Mungo Gilchrist, CEO of Spirits Platform, said there are some interesting movements in the category as brands seek to expand the demographic of consumers they appeal to.

“Within Cognac, there is a polarisation occurring. The top end of Cognac (XO and above) continues to show steady growth. However, the most growth is occurring at the lower end of Cognac,” Gilchrist said.

New entrants expand the category

As popularity and demand for the category grows, new brandy entrants in particular are readying to enter the market, given the rules and regulations for producing brandy are much more achieveable than for Cognac.

Redin hopes that this will be a key growth area in Australia and one that is done well, in order to ensure the continued appeal and longevity of brandy.

“We will hopefully see some new entrants into the domestic Australian brandy market who have been patiently maturing their spirit until it is ready to release. For so long St Agnes stood alone in the category as the premium leader, I hope other distilleries can show the patience we have by not releasing their spirits too young and raw,” Redin said.

Klintworth also agreed that the time is ripe for high quality local products that will help the Australian brandy category find its feet again in the global market.

“Australia has a really special history with brandy and in its heyday, Australian brandy was once compared to the finest of the French Cognacs. So as the Australian distilling industry grows, and as more distilleries start to utilise wine from their regional winemakers, I think we will start to see a real boom of Australian brandy production in the future,” Klintworth said.

“It’s only a matter of time before more producers really start making some noise both locally and internationally too, following in the footsteps of Australian craft whisky and craft gin no doubt.”

Conde also agreed with the prediction that Australian brandy is set to grow in the footsteps of other local spirits, and said: “Australian spirits in general are growing in the best way: better quality, wider offering, more showcasing and appreciation.

“[And there is] still a long way to grow, as the boom of Australian spirits is only a few years old.”

Cognac versus brandy

When discussing the Cognac and brandy category as a whole, one topic that always comes up is the difference between the two segments, and how deep this divide is when it comes to the success of different types of products.

Contributing to this divide have been some misconceptions in Australia, largely about brandy, although that may be changing now.

I think Cognac and brandy drinkers alike are now more open than ever to discovering locally produced brandy.

-Holly Klintworth, Managing Director and Head Distiller Bass & Flinders Distillery

As Klintworth said: “Some might say brandy had a bit of a fashion crisis in Australia the 60s – but a large part of this was also due to the increased popularity of clear spirits at that time.

“Brandy is still sometimes thought of as a drink for the older generations, and not for the younger discerning generations who today are concerned with quality and craft. However, I think we are seeing perceptions change as quality brandies enter the market, proving brandy still has a place, maybe even for the top shelf, in Australia’s drinks cabinet.”

This so-called ‘fashion crisis’ is something that Gilchrist noted internationally as well. Spirits Platform distributes Cognac brand, Rémy Martin, but also French brandy label St-Rémy, so has insight on both sides of the category.

“Long perceived as a conservative and price sensitive category with older consumers, brandy is showing encouraging signs of innovation and premiumisation,” Gilchrist said.

“While the bottom end of the category is declining due to price increases driven by surging logistics costs, there is interesting growth at the top end of the category. St-Rémy XO has been growing strongly for several years and St-Rémy Signature recently launched successfully and aims to attract younger consumers into the brandy category.”

Conde said brandy is certainly catching up to the strong image Cognac has and forging its own path rather than conforming to the ideals of Cognac.

“Cognac is an old-world spirit and its image is deeply embedded with France and a certain way of life. Surprisingly, the US hip-hop scene also plays a role in Cognac’s image,” he said.

“Overall, Cognac is recognised as the benchmark for brandy, [but] Australian producers are definitely catching up with their own identity.”

Is it time for a Cognac and brandy renaissance?

According to Klintworth, “brandy isn’t too far behind” the popularity explosions of the craft gin and whisky categories. There have been rumblings from all over the spirits market in Australia in preparation for this surge.

To help get to the surge point, education is key, and is something which the industry has been fostering on a growing scale.

“COVID and lockdowns have certainly given consumers more time to research online as we haven’t physically been able to hold master classes and tasting for nearly two years. Since January 2020 visits to the St Agnes website have jumped by over 45 per cent,” said Redin.

Klintworth said there is a hunger amongst consumers for more information, which is proving the old adage - if you build it, they will come.

“For us, education comes from allowing people to make up their own mind through tasting and experiencing our brandy for themselves. We take the time to tell people our brandy’s story, also sharing the ups and downs of brandy’s place in Australian history,in the hope that a new appreciation for brandy can develop,” Klintworth said.

“We have certainly found a strong uptake of our at home brandy tasting packs which are an introductory

sample of brandies and eau de vie - we released this during the pandemic to help consumers explore, enjoy and educate themselves on these products in a fun and informative way at home.”

Brands teaming up with venues and retailers has also been a great method of education according to Gilchrist, especially for dismantling the misconceptions around brandy.

Cognac is recognized as the benchmark for brandy, [but] Australian producers are definitely catching up with their own identity.

-Emmanuel Conde Brand Ambassador Cerbaco

“Some on-premise venues are using St-Rémy Signature instead of VS Cognac in their cocktails. Several domestic brandy producers are also helping to rejuvenate the category with modern and attractive brand propositions,” Gilchrist said.

Conde added that cooperation across the industry at all touchpoints will prove the most successful in this endeavour.

He said: “We are seeing more and more brand specialist stores (Porter’s Liquor Lansvale, SwissCellars in South Strathfield, or the likes of OakBarrel and Camperdown Cellars), and restaurants are investing in staff training for the category. Bars are using brandies, either clear or aged, in their cocktails with amazing results. Importers are doing the hard work of education and logistics to offer the consumers more options beyond the classic large brands of Cognac and brandies in general.

“People are starting to discover [this category] and enjoy it. The year will probably see the appreciation of brandies continuing, one drink at the time.” ■