Travel retail in focus: Cognac

With new figures pointing to an overall wine and spirits decline in travel retail, the time for change is nigh. And if one category is reinventing itself in the channel right now, it’s Cognac.

Cognac has made a collective and concerted push to poach drinkers from other sectors

It was a disconcerting, if not unexpected announcement made by Erik Juul-Mortensen, president of the TFWA (Tax Free World Association), at the TFWA Asia Pacific Exhibition & Conference in Singapore last month. Provisional Generation Research figures revealed the entire travel retail and duty free business had contracted 2.3% in value terms in 2015, with wine and spirits sales shrinking 2.7%.

The declines had been forecast. A perfect storm of currency volatility and shopper apathy, amplified by a number of tragic terrorist events, meant that in 2015 consumers reined in their collective TR spending for the first time in six years – and back then, the industry was suffering under the full effect of the global financial crisis.

For Cognac, the contraction has put a dampener of the celebrations heralded by the category’s triumphant return to growth last year. Globally, volume and value sales were up by 8.5% and 21.3% respectively, according to the Bureau Interprofessionel du Cognac. Perhaps this goes some way to explaining the optimism of the sector despite the overall TR category declines, and Cognac’s collective and concerted push to poach drinkers from other sectors.

“It is important to Beam Suntory GTR to offer a variety of products of the best possible quality to appeal to a broad range of consumers,” says Fernando de Vicente Meirás Sr, global marketing manager GTR, Beam Suntory.

The company has recently introduced Courvoisier Artisan Edition, a range of three travel retail exclusive Cognacs – a launch noted for its use of language surrounding the casks used in maturation. It’s no secret that single malt Scotch drinkers are firmly in the brand’s sights.

“Similar to Scotch single malt whisky brands, we pride ourselves on the importance we place on the wood that makes Courvoisier so special,” Meirás continues. The collection comprises Courvoisier VS – Double Oak, initially matured in virgin French oak before being transferred to old Cognac; VSOP Triple Oak, a double matured small-batch Cognac which has spent time in both new and used French oak casks before being married in wooden vats; and XO – Ultime, which has been triple aged in new Tronçais wood and Limousin casks followed by used oak.

Meirás says the company’s “dedication and respect” for the traditions and processes of wood and cask management demonstrates “Courvoisier’s commitment to making Cognac accessible for all spirits drinkers”.
Hine is another Cognac house looking to cast its net wide and draw in consumers from other drinks categories. Here, the house speaks the language of wine fans. “More than messages, we aim at conveying the essence of our efforts at Hine: the vineyard,” says CEO François Le Grelle.

Rémy Cointreau too is leaning towards wine language in the channel with its brands Louis XIII and Rémy Martin. “We talk about the importance of terroir – not just the land but the air, the water, the climate, the quality of the grape,” explains Peter Sant, managing director, Rémy Cointreau GTR.

The renewed realisation that consumers rarely stick to one category, especially in the airport, throws up as many challenges as it does opportunities. How can one maximise the potential of a perfected on-shelf assortment when duty free allowances are tightening? How can customers be persuaded to mix and match when an unwillingness to carry shopping is such a strong barrier to purchase? These are all important questions for Cognac and other categories as the travel retail community seeks to recoup growth.