The Cognac and brandy brands to watch in 2015

18th December, 2014 by Becky Paskin

Luxury Cognac companies were caught unawares by growth declines, but it’s not all doom and gloom for the category as we pick three promising brands and trends to watch in 2015.

Cognac-Brandy-brands-to-watch-2015

These are the Cognac and brandy brands worth looking out for in 2015

We’re sorry to say the overall outlook for Cognac hasn’t changed that much over the past year. Global Cognac shipments dropped 10.2% by value and 6.7% by volume in the 12 months to July 2014 (BNIC), felt most keenly by VSOP expressions and above.

Everyone, from Cognac producers to luxury goods analysts, agree the situation has lasted longer than anyone first predicted. In November, Paul Wood, global luxury leader for financial advisory firm EY, said: “The slowdown in the growth rate was not anticipated by the industry and as a result a number of luxury companies were caught by surprise.” But with the light at the end of the tunnel too far away to simply “hang in there”, producers are seriously starting to alter their business models to recoup lost sales.

For some this means a greater focus on younger expressions and in particular VS, which increased 3.1% in volume and 1.8% in value in the 12 months to July 2014 (BNIC) due mostly to solid sales in the US. In Western markets and mature Asian cities with vibrant bar scenes like Shanghai and Hong Kong, the promotion of Cognac as a mixable spirit for use in cocktails will be much more common next year with more brands joining Courvoisier’s lonely fold. As for the rest of China, a focus on endorsing Cognac as a spirit to drink at mealtimes will be key, as already shown by the work Martell’s Distinction is doing in the market.

Rebalance and stabilise 

That’s not to mean luxury expressions will fall out of favour altogether. While some houses work to rebalance their focus to be more inclusive of the bottom end of their portfolio, others are stabilising their geographical spread and targeting luxury releases in traditional western markets where there is still growth, like the UK – up 10.1% in 2013 – and the Cognac powerhouse of the US, which with growth of 1.9% is still the category’s largest market by volume, and by quite some way.

Both Courvoisier and Hennessy have been wise enough to spread its base across a variety of markets with a ladder of products rather than put their eggs in one basket and are attracting reverence from some of the other, smaller producers. Jan Braastad from Cognac Tiffon, whose Braastad brand is the world’s sixth largest, believes that to survive Cognac producers are better off following the seemingly buoyant Hennessy model. “Today we can say the leader of Cognac is Hennessy, and we are all in a way following their strategy, even if we don’t say it openly, it’s clear that in this business the power of the big brands dictates our own direction,” he says.

The good news is as the dust settles in China and producers rejig their geographical supply spread, CAGR growth is forecasted to grow 2.4% between now and 2019 (IWSR) – double that seen in the last five years (2008-13). The key is to play the long game.

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