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Could travel retail save Cognac?

Cognac is seeing a slowdown after growth during Covid and a boom in Hainan, but thoughtful activations could see the category pull through.


*This feature was originally published in the September 2023 issue of The Spirits Business magazine.

­­­“Travel retail is doing well,” says Anne Blois, global commercial director at Camus Cognac. “The rebound in duty free started with Europe, Middle East and Africa at the end of last year followed by Asia Pacific in Q2 this year. In the year to date we are at 90% of where we were pre-Covid, and expect to be in growth versus 2019 by Q1 2024.”

Yet overall, it seems Cognac has been under pressure in the sector. “It was seeing a positive recovery in line with other categories during the Covid period,” says Manuel Gonzalez, GTR marketing director at Courvoisier owner Beam Suntory. “But my concern is that we are seeing a slowdown in 2023, both in domestic and travel retail. This is a global slowdown, so it’s not specifically in China, but also in the Americas and, to a certain extent, in Europe.”

This echoes an IWSR report on key GTR trends in 2023, which said Cognac had been “hit by soft demand” in the US and “the absence of Chinese travellers, its two most important consumer groups”. In 2022, IWSR said Cognac sales in GTR grew by 24%, compared with 77% for whisky. Gonzalez suspects that Cognac has been losing share to Tequila in the US, and to “baijiu, which is still growing big time in China”.

Last year Courvoisier was relaunched with a new portfolio and visual identity, he says. A new boutique in Hainan triggered an increased performance for the brand, Gonzalez says, pointing to IWSR data from 2022, which ranked the brand fourth, up from fifth, in China by value.

Having surfed the boom in China’s offshore duty-free hub of Hainan, Cognac may be suffering from its contraction, with the island’s duty free sales down by 30% last year to 34.9 billion yuan (US$4.8bn). But as Euromonitor senior analyst Prudence Lai told Jing Daily in June 2023: “Hainan will not be the only duty-free destination in the country going forward.” Other cities, like Shanghai and Guangdong, are ramping up their travel retail offer as Chinese consumers opt to buy luxury western spirits in their home market rather than in Paris, London, or New York.

Delamain managing director Charles Braastad says the sector “needs to pay attention to very dynamic and creative alternative categories”, such as whisky. Immersive activations in airports can certainly help educate consumers. “Only a few people know about Cognac, where it comes from, which grape we use, and that there’s a notion of terroir,” he says, before adding: “Delamain is performing very well, with a new strategy and new packs. GTR sales are above pre-pandemic.”

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