Cyril Camus on the future of Cognac

Cyril Camus, president of Cognac Camus, speaks to Tom Bruce-Gardyne about his inevitable career climb up the family business.

Cyril Camus, president of the world’s fifth largest Cognac house, Coganc Camus

”I still very much remember the first time seeing a bottle with our name on it in a shop window in New York,” says Camus about his first overseas business trip at the tender age of eight.

He was with his father, Jean-Paul, one should add. Three years later he sneaked his first, surreptitious slug of the family spirit while doing the dishes, though “the real learning and tasting about Cognac started when I was 16 with my father”, he recalls.

As the fifth generation of the fifth largest Cognac house, one can’t imagine Cyril Camus spent too long with the school careers adviser, though he insists his father never put any pressure on him or his elder brother to join the family firm. Business school in the US, France and Beijing was followed by five years in China as head of commercial relations before returning to France in 1998, becoming President and sole shareholder in 2003.

Last year, Camus celebrated its 150th anniversary in rude health, having trebled its turnover to €158 million in the past five years. And now, as if to complete the circle, Cyril Camus now takes his two young sons on business trips around the world where they “play the usual game of trying to spot the first bottle of Camus in duty free”.

The brand, which scooped a Master, three Golds and a Silver in our Cognac Masters in December 2013, has always had a strong presence in travel retail, right from the start. “The channel is a great fit for the brand because of its premium position,” Camus explains. “By nature, duty free allows regular Cognac consumers to buy something a little bit more premium than usual. From a strategic point of view it brings us a very high level of visibility and tends to be a precursor to entering any given market. So we tend to build our image and awareness in duty free and then leverage this in the domestic market.”

If you include duty free, US exports account for 18% of the total. “Traditionally it was not a big market for us because it was very much a VS-orientated market, where we are more of an XO type of company. But that said, you can’t be absent from what is essentially the number one or two market for Cognac.”

The story of how the noble French spirit was on its deathbed until rescued by rap artists in around 2001 may have been over-played. It has certainly been well told, though “what really helped was the association with music videos”. Camus says, “This really positioned Cognac as a regular consumption item, but in the world of luxury this is something we always dream of, but very seldom manage to obtain.”

The company’s US sales have doubled annually for the last two years, though not through any hip-hop endorsement, as far as he knows. “We have been growing very rapidly, especially after the financial crisis when I believe consumers turned more towards authentic brands with higher notions of heritage and craftsmanship.”

Chez Camus – the family’s home of Chateau du Plessis where the family celebrated it’s 150th anniversary in June last year

He believes that drinking patterns are evolving into what he calls “taste-driven consumption” in the States. Camus explains: “We see consumers with a very strong appreciation of Cognac and very strong brand preferences which suggests they’re choosing on taste as opposed to the latest promotion.”

On that score, his firm could never win a battle of the billboards against Hennessy, Courvoisier, Martell and Rémy, or dream of outspending them on TV. Competing with “the big four”, who together account for a good 80% of Cognac sales, is “a challenge at times”. Camus comments: “There are some very dominant companies who would tend to monopolise access to the market, but at the same time they have proven to be true leaders in terms of expanding the overall market.”

He has seen a shift in direction, as he points out: “Throughout the 1990s we were really focusing on the gifting side of Cognac. We’ve now moved to being about product-focused innovation and putting things out that others wouldn’t necessarily have.” Examples include the Borderies XO and the Île de Ré Cognac launched in 2005. Camus reveals: “We didn’t invent Île de Ré, but our innovation was to put it on the market and communicate it in a way consumers could relate to.”

In contrast to the consumer-led approach of the big guys, Camus says: “We always start with the product, and how we can create the best possible, most interesting and authentic Cognac, and then identify the consumers who would benefit from it.

“I believe it’s a lot more long-term and much more linked to one’s relationship with the product and passion for it.” He concludes: “We bring something different to the market, products that have a personality and a soul.”

Being linked to a single category “does make access to market complicated when you’re facing groups offering a very extensive one stop shop”. To counter this he has created a portfolio of compatible brands including Chinese spirits, the premium gin Ungava, and the super-premium vodka Beluga which he distributes in Asia.

It is here, particularly in China, where premium Cognac has really boomed in recent years. The Chinese overtook the States in value some time ago, and may now be ahead in volume as well. “If you project the growth curve for China you do reach a point where demand for Cognac exceeds the overall stocks available,” says Camus. “So the short-term interest of a lot of companies would be to shift volumes from entry-level products in the more mature markets to China.”

As someone who knows the country intimately and is fluent in Mandarin, you could forgive Cyril Camus if he decided to focus entirely on China where this premium brand ticks all the right boxes. Instead, he has decided to cap Chinese sales at a third of the total. “I’m looking for geographic balance,” he explains. “It’s a very long-term approach and we’re literally putting this year’s potential profit on hold to buy stability in the future.”

According to Cyril Camus: “We’re literally putting this year’s potential profit on hold to buy stability in the future

To anyone tempted by short-term profits, he asks the following: “When you project yourself twenty years down the line, do you really want to have just one market making 50% of your sales? Do you really want to abandon all other markets?” While many of the corporate suits in Cognac might agree in private, they are trapped by the endless cycle of quarterly results and shareholder expectations, neither of which encourage long-term vision.

As well as having the right geographic

spread, Camus believes it’s crucial that producers keep offering the right balance of products in the future. “We are not cutting back on our volumes of entry-level Cognac just to be able to sell more at the super-premium end, and I really strongly believe that today’s VS consumer is tomorrow’s XO consumer.” However, he reckons that China “will stay VSOP and above if only because of the duty and tax structure that makes VS less attractive”.

At the top-end, where gifting and banqueting play a major role, the category has been hit by the Chinese government’s anti-extravagance campaign. “It has had an impact, but I would say there has been a lot of over-reaction,” Camus maintains. “The situation will stabilise as the economy keeps growing because the sharing of premium products and the giving and receiving of gifts is part of the culture. I believe it will start to grow again as early as the first quarter of next year.”

To help position the brand correctly, the company has opened five stores in China as well as a lounge – the Camus House, in Beijing. It has helped it get closer to the consumer and “explain our brand difference and create an emotional link”, Camus explains. “It’s a way to establish a one on one dialogue with consumers, and it’s worked extremely well.

Back to the thorny issue of supply and demand, he declares that the Cognac region has begun increasing production of late. “Of course it will only become available for sale in a number of years, but the movement has started.”

For its part, Cognacs Camus has 180 hectares of vineyards, principally in the Borderies region on the north bank of the Charente, and is slowly expanding whenever neighbouring plots become available. “We’re probably the only Cognac house increasing its vineyard holdings,” says Camus. “I believe it’s a prerequisite for the future health of the company.”

At present, home production accounts for 8% of the total, with the rest coming from some 200 growers on long-term contracts.

With a prestigious brand, good stocks of aged Cognac and 180 hectares in the Borderies, the company would appear extremely desirable to any corporate player with deep pockets. “There’s a lot of interest, but usually it doesn’t get as far as the doorbell,” explains Cyril Camus, with a smile. It is always flattering to be courted, but as everyone in the Cognac region knows, Cognacs Camus is not for sale.