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10.2006

Massachusetts Beverage Business

archivedFeaturedArticles

Cognac & Brandy

Article By: Aimsel Ponti with Ken Sternberg

As a combined category, brandy and Cognac has doubled in sales from ten years ago. While it might be climbing the ladder slowly, it's climbing nonetheless. In 2OO5, total volume increased .7% to 1O.2 million 9-liter cases. A breakdown of the statistics shows that most of the growth is in the Cognac category. From 2OO4 to 2OO5 Cognac's numbers increased 1.5% while domestic brandies went up .5% and imported brandies actually decreased by a little over 3%. Additionally, the growth of last year is the smallest since 1994. One reason for this is the unwavering dominance of vodka and other flavored spirits. In response, many Cognac and brandy marketers have found new ways to maintain and increase their presence in bars, restaurants and liquor stores. From basic coffee and fruit brandies all the way up to the luxury marques, this is a diverse category steeped in history that continues to attract a broad range of consumers, both traditional and offbeat.

It's important to note with these data, however, that it's largely the VS brands that are sluggish and pushing the entire Cognac segment down in terms of volume, while higher marques continue to drive the segment, says Dana Nicolas, US Brand Director for Remy Martin VS, VSOP and 1738. "Higher marques are continuing to grow as VS and lesser levels are slowing down," she adds, stressing that, "The Cognac category continues to grow and thrive."

COGNAC DIVERSIFIES One of the biggest factors driving Cognac and brandy sales today is their continued and loyal consumption by African-American, Asian and Hispanic consumers. Whether they admit it or not, all Cognac houses regard African-American consumers, and, increasingly, Hispanic drinkers, to be their most important consumer groups. Asian buyers are still extremely faithful, as well. Another factor driving sales is the curious, explorative nature of younger drinkers to try new and innovative beverages, whether neat or mixed into cocktails. The latter segment seems ripe for effective, intelligent promotion by Cognac and brandy marketers. Some grasp this opportunity, others seem to ignore it.

Hennessy, for example, hosts tastings at bars and clubs where customers can sample innovative Cognac cocktails, says Yvette Baez-Goss, Brand Director for Hennessy VS. This is an effective strategy, as most customers in such settings might never drink Cognac neat, but they are accustomed to drinking flavored cocktails mixed with high-end spirits, she says. "We're allowing consumers to experience Hennessy the way it's consumed around the world," she notes. To that end, the company created a series of cocktails, such as the Hennessy Moscow and the Hennessy Shanghai, to add a little international flair. This strategy is especially effective with more traditional consumers not into Rap or Hip-Hop, Baez-Goss remarks, stressing that the Hip-Hop crowd remains vital to Hennessy.

"We're constantly trying to influence their association with the brand, constantly striving to have relevance for the African-American male consumer, so whether it's music or technology, we try to stay abreast of what's most relevant in his life and surround the brand in those experiences," she comments. This is why Hennessy continues to be involved with music, and may be partly responsible for Hennessy's 57 percent US market share. "Hip-Hop has been pretty significant for us and the community supports us." One way Hennessy reaches out to them is by flying Hip-Hop DJs to France's Cognac region to learn about Hennessy first-hand.

This year, the company is revitalizing its ad campaign with a big outreach to the Hispanic community. One of the marketing tools they'll be using is a Spanish language television ad produced at the suggestion of its Latin America media agency. "The spot turned out so beautifully that we adapted it to the general market and to the African-American consumer," explains Baez-Goss, noting that it's rare for an Hispanic ad to be adapted to the general market. But it takes more than a television campaign to gain such popularity in the Hispanic market. "Many members of the Hispanic community, particularly the Caribbean Hispanic community, constantly travel between the US and their home countries," she says. For many, Hennessy is the US link and is what they take with them as a gift when they go abroad.

Another program Hennessy launched last summer is a national tour called "Artistry", that brings together DJs and singers. "Artistry combines different musical genres, performers and Hennessy cocktails in a way that no one has seen," Baez-Goss says. Part of the strategy behind these promotions is to generate more awareness of Hennessy's ultra luxury line. "We have higher marques that consumers are largely unaware of which rival the quality of Remy Martin Louis XIII. We think there's an opportunity to elevate our credentials by building awareness on what we call the Prestige Range - Paradis and Hennessy Richard," she states.

Targeted to African-American drinkers, Martell VSOP launched its "Rise Above" promotion campaign last year. The company sponsors parties at hip dance clubs and bars. It also hosted the 5Oth birthday party for the Reverend Al Sharpton. "The profile of the Martell consumer skews male, and is the highest percentage of male consumers among non-whiskies," says Abegail Domond, Martell's brand director. Domond remarked that in 2OO5, Cognac sold more than 3.5 million cases in the US, primarily from the African-American segment, with Asian-Americans contributing to growth of the higher marques, such as VSOP, XO and specialties. These consumer groups, along with Hispanics, are Martell's greatest focus.

Addressing the soaring popularity of mixed drinks, Domond remarks: "Like other spirit categories, Cognac and Martell have benefited from the cocktail renaissance and the trend toward premium brands. Cognac-based cocktails and mixability continue to drive Cognac growth and Martell is capitalizing on this trend by promoting its VS and VSOP marques mixed with fruit juices, sodas and tonics. Martell's higher marques - L'or, XO, Cordon Bleu, and Noblige (the newest marque in the Martell portfolio) - are promoted to be consumed in the traditional Cognac fashion: neat or on-the-rocks." Asked how the brand feels about such marques being used in cocktails, Domond replies, perhaps diplomatically, "While all Martell Cognacs are blended to be enjoyed in their purest form, Martell VS and VSOP are also wonderful mixed with juices and sodas in today's popular cocktails."

"Hip-Hop has played a huge role in every brand's success. The entire category's growth has been driven by Hip-Hop over the past 1O years," says Nicolas of Remy Martin, adding, "Cognac was doing okay, then there was an explosion. They drink it more mixed, on ice with ginger ale, etc." She continues: "Cognac is hugely an ethnic-skewed market. More traditional, Caucasian consumers don't drink it as often, and when they do it's from a traditional snifter by a fireplace in cold weather." Nicolas also notes that not only is it important to retain all types of existing consumers, but now, "You're playing in a bigger sandbox," given all the super premium tequilas, vodkas and other beverages in the market. "We need to respect our existing consumer base, but ask what else can we do to reach out to new drinkers," she says.

To help achieve this, Remy Martin will roll out a new advertising program this holiday season that will include radio, print and internet components. The company will also place interactive banner advertisements on non-Remy websites. The firm will continue to have promotions and tastings all year at on- and off-premise accounts, host celebrity events, and hold private tastings of its higher marques.

Courvoisier is another house that appears to have branched out and successfully bridged the gap between demographics. "Courvoisier has had a successful year with programs that have introduced the brand to new audiences and engaged our core consumers," says Brand Manager Allen Spence. Its big campaign has been the House of Courvoisier, a program Spence says combines luxury with the world of fashion, sports and entertainment. The program recently hosted the Black Entertainment Television Awards after-event party and had a presence during the NBA All-Star weekend, where the VSOP was used in specialty cocktails aimed at introducing younger consumers to Courvoisier. Attendees got to sample the $5OOO per bottle L'Esprit de Courvoisier, which contains vintages dating back to the 19th century.

Courvoisier's other big promotional push was an education tour into five major US markets last year by Pierre Szersnovicz, the firm's Cellar Master and Director of Liquid Quality. Szersnovicz met with distributors, retailers, wait staff, bartenders, and consumers. "He led in-depth seminars, hosted wait staff education trainings and made visits to key accounts in each market," Spence says. As far as how consumers are enjoying Courvoisier, he points to neat or on the rocks as being the standards. There are some specialty cocktails that Courvoisier has developed including the Brown Sugar, the Courvoisitini and the CV Strawberry Lemonade. "Our drink recipe program has helped us reach new audiences, especially women," he explains. "Courvoisier's future looks to be very exciting. We will continue to host House of Courvoisier events throughout the country and are looking at other exciting programming to reach our core new customers," says Spence.

A NEW PLAYER The ever-enterprising Sidney Frank Importing Company recently joined the ranks of Cognac producers with three products, including two flavored Cognacs, under the Jacques Cardin name. Abaigeal Hendron, brand manager for Jacques Cardin VSOP at Sidney Frank tells how this all came to be. "We work very closely with a company in France called H. Mounier - a small Cognac company that's been around for hundreds of years," she says. A couple of years ago, when the company decided to sell Grey Goose vodka to Bacardi, the late Mr. Frank himself decided he wanted to get into the Cognac business. "Cognac is a large market and the Cognac business in the United States has basically doubled in the last ten years and has more premium connotation than brandy because of its delineation from the Cognac region," says Hendron.

Frank wanted a piece of that action and knew that the category was dominated by a small number of players. "He wanted to bring something new to the category. We taste different, our flavors are very innovative and our package has tremendous positive feedback," notes Hendron. She goes on to say that they wanted something different with an upscale feel and worked with H. Mounier for two years to develop it. "We sat down with their master blender and went through what sort of style we wanted for the product, what sort of flavor profile; it's very much a blend designed by the Sidney Frank Company." In addition to a traditional VSOP Cognac, the two flavored VSOPs are apple and jasmin. "Apple is pretty hot in the United States as a profile and the Jasmin has a floral base rather than a fruit base so people are very intrigued by it," Hendron comments. The target audience, she says, is a broad one, though they are specifically targeting three main groups: the African American, Hispanic and Asian communities. They're also going after the 25- to 44-year-old age bracket - both male and female. Hendron spells out some of the strategies for attracting consumers to these three new Cognacs, one of which is selling a VSOP at a few dollars above what a VS would sell for. Packaging was also a key focus point. "You get a product in a fantastic package with a cool, hip name and people really like it," she says. She went on to say that in terms of mixed drinks, any sort of carbonated drink or juice drink will complement Frank's Cognacs.

The focus for the first six months will be on distribution, working with bartenders and hosting tastings with as many consumers as possible. "Jasmin and apple in a Cognac are unique and it's kind of a first for the business," says Hendron. "I think it will be refreshing to bring something new into the Cognac category. There's a lot of emphasis on the category and there's definitely room for somebody like us." There is also something of a legacy around the JC Cognac launch because Sidney Frank passed away last January. "There were two products that he was working on and was quite passionate about before he died and this was one of them," she notes. (The other spirit was the recently released Michael Collins Irish Whisky.)

AND WHAT ABOUT BRANDY? Although it's the less famous side of the category and may be less glamorous, brandy is still a spirit with clout. It's hard to imagine the cocktail world without such classics as the Sidecar and Stinger, not to mention the concoction created by Alexander Woollcott, the Brandy Alexander. From lighter domestics to imports, brandy has a solid position in the market. The top three domestics are E&J Gallo, Paul Masson and Christian Brothers. E&J and Masson account for the majority of growth, although domestic brandy sales on the whole went down last year by just under two percent. Imports account for 6.9% of the overall category with the French brand Raynal leading the pack. Mexico's Presidente comes in second with St. Remy, another French brand, rounding out the top three.

Although brandy is still a solid performer, account and marketing experts, as well as restaurant and bar staff, may need to focus more on creative advertising campaigns, on- and off-premise promotions, and greater consumer outreach efforts to boost sales of their brands.

Christian Brothers is one example of a domestic brand that had flattened out and then got a new lease on life when it changed hands several years ago. When Heaven Hill Distilleries in Kentucky took over the brand in 1999, it knew it would also acquire all the history that goes along with the fabled Christian Brothers name. In 2OO2, the decision was made to redesign the label. Justin Ames, the brand manager for Christian Brothers at Heaven Hill explains that it was time to make some adjustments. "The label needed to be updated; a lot of people didn't understand that the regular Christian Brothers Brandy was really a VS-level brandy. We played that up," he explains. Ames also says that they focused on on-pack promotions. One of the most successful of the on-packs was a CD sampler by trumpeter Chris Botti, who used to play with Sting. Heaven Hill also included a 5Oml bottle of the VSOP on some of the VS bottles to try and get people to trade up and build loyalty within the family of brands.

Christian Brothers is also getting in on the widespread popularity of poker. "Christian Brothers drinkers, whether Hispanic, African American or Caucasian, really enjoy playing cards, so we're going back to a Christian Brothers card deck on-pack," remarks Ames. He adds that within the African American community, the company is looking to do tie-ins with some barbershops: "In the African American community, the barber shop is a key focal point - a gathering place." The idea is to have Christian Brothers sampled at an invitation-only event where people go in, get their hair cut, and maybe a manicure, while tasting brandy.

As far as the Hispanic community, Christian Brothers has done tie-ins with radio stations and DJs, and has sponsored events at Hispanic-focused grocery stores in California. Ames says this program can easily expand to the rest of the country. "In the Latin American community, we do something called 'CBB . . . y se vive', which is basically kind of a word play on to drink and to live." Older Caucasian drinkers still are part of the mix as well and Christian Brothers still has tremendous equity with those consumers, he says. "Mostly in colder weather states we have a huge following, so we are focusing on doing some outdoor events with Christian Brothers drinkers in those areas." Ames also notes that Christian Brothers' popularity is almost evenly split between men and women.

"For a product like brandy, which can have a lower point of entry, it is a much more attainable product, particularly if a consumer is experimenting," comments Heaven Hill spokesperson Josh Hafer. "Cognac, too, can be a daunting experience in the beginning. It's about as approachable as entering wines after having been a beer consumer for years. Christian Brothers attracts those consumers by providing a diversified family of products." He points out that Christian Brothers VS may be a point of entry, but so are high quality products like VSOP and XO.

As for Hpnotiq, a leading Cognac/vodka/fruit juice hybrid, Hafer cited the brand's impact "Hot Brands" Award for sales volume increase during 2OO5.

SPREADING THE WORD Tyrone Croom, On-Premise Specialist from United Liquors says that his best selling imported brandies are Constantino from Portugal and Raynal from France. Domestically speaking, the Coronet VSQ is on top. The two leaders for Cognac are the VS and VSOP from Hennessy and Martell. Overall, the category has seen growth from last year. "We're looking at the brandy category at about 15 to 2O percent, and then on the Cognac category, between 1O to 2O percent," states Croom, who attributes the growth, especially in Cognac, to consumer knowledge. "Consumers nowadays are just much more educated. People have sophisticated palates," he says. "It's interesting because all the things that are being touted about premium vodkas (nuanced flavors and aromas) have always applied to Cognac," he observes, adding: "We're finding consumers are (now) more educated and it's our job to make sure we point out all the attributes of Cognac." The Hip-Hop community is still huge with regard to the impact on sales, he says. "With Cognac, it's about status and sophistication, and I think as far as the Hip-Hop scene and the African American community are concerned, those two things go hand in hand."

Croom believes that some of the lower-end flavored brandies, such as coffee and blackberry, act as a gateway to more premium products. Nine times out of ten, he says, bar patrons don't know that brandy is a key ingredient to a favorite cocktail. This could be an opportunity to reach out to consumers and get them to focus on a particular brand, he adds. When it comes to getting customers to try brandy or Cognac, no one is more influential than the bartender. Croom remarks that, "On-premise, bartenders are our gatekeepers." He appreciates the importance of working with bartenders to keep them informed and enthusiastic about products. In general, educating staff about the heritage of a brand and getting them excited about new promotion efforts goes a long way toward getting one brand recommended over another and having it featured on a cocktail menu.

Lloyd Foster, Marketing Director at Classic Wine Imports says that his best sellers are Hine and Pierre Ferrand. "Hine is actually up a good bit for us; it has definitely grown over the past year or two." He also likes the domestic brandy, Germain Robin, from California. "I think it's worth mentioning, especially since Robin was born into a Cognac family and it's produced in a classic Cognac brandy still."

AND FROM BEHIND THE BAR Jonas Atwood, wine manager of Meritage restaurant at the Boston Harbor Hotel, says that their biggest selling Cognac is Courvoisier VSOP. He also observes a significant shift with who the customer is. "The customer has changed drastically over the last 5 to 1O years. The smoking ban is one factor, because Cognac used to be popular with the cigar crowd," he remarks. Businessmen of all ages are the primary consumers, he says, adding: "The most recent demographic is African-American men and others savvy to the Hip-Hop culture, which has glamorized Hennessy, Remy Martin and Courvoisier." For the most part, Cognac is ordered in snifters, but occasionally on the rocks or with a mixer such as Coke, he remarks.

At the hip billiards and dance club, Felt, in downtown Boston, Special Events Manager Danielle DiGiorgio comments, "Hennessy is the most popular and people are drinking it with Coke, Hpnotiq and neat." She emphasizes the continued mark the Hip-Hop community makes. "Within the past six years, with Hip-Hop on the rise, I feel this liquor has not only gained popularity, but with a younger crowd," she says. She attributes this in part to the number of Hip-Hop celebrities who sing about Hennessy and Hpnotiq in their music, which has brought them to the attention of younger drinkers. Overall, when it comes to Cognac, DiGiorgio thinks that it's going to take time to really win people over. "It may just be a taste that grows on you. The problem is, many people may not have the patience to try something new, when they know what they already like."

Getting customers to try something new is precisely why James Nicas, owner of The Castle restaurant in Leicester, presents guests with an extensive drinks menu after dinner. The list includes some 19 Cognacs (including Paradis and a single vintage Pierre Ferrand vertical collection) along with Armagnac, Port, single malt Scotch, and other beverages. "Cognac has gone over big time," he says, noting that 26- to 44-year-olds are the strongest buyers now. "They want to experience as much as they can, they feel it's their time to live a good life," he observes, adding how this age segment has driven the popularity of spirits over the past three years. Many, he says, have a scotch before dinner and a Cognac after dinner. Brandies, too, are big sellers, especially in numerous variations of flavored or flaming coffees, Nicas says.

A RETAIL CHECK-IN Gary Park, owner of Gary's Liquors in Chestnut Hill reported last year that the Cognac and brandy category was another strong one for him, and this year it's been more of the same. His top-selling brandies are the domestic E&J and the Italian import Stock, though a couple of other brands also fare quite well. "Christian Brothers is doing much better; they've relabeled and repackaged - it's always been a good standby here. Paul Masson also does well," remarks Park. Another big selling imported brandy is Metaxa from Greece. "We've got to be one of the largest Metaxa customers in the state; we have one town over with a very large Greek population and we sell quite a bit." Looking at Cognac, Park underscores the diverse customer base. "It's unbelievable because of the demographics around us that we have a lot of these ethnic populations and it's amazing how each one goes into certain segments of it."

Park says the Russian community in the area continues to purchase large quantities of Cognac, particularly the Chalfonte VSOP, of which Park goes through 24 cases every few weeks. Hennessy, Courvoisier and Remy Martin continue to perform strongly, and in-store tastings have elevated other brands as well. "Pierre Ferrand has been very aggressive in doing that, especially during the fall and winter seasons. They get a great response because a big key to selling some of these better Cognacs is actually getting people to taste it," remarks Park. "On some of the boutique brands it's just been very difficult for somebody to look at a fifty dollar bottle and think, what if I don't like it?" Park also notes that at his store, the Cognac and brandy customer keeps getting younger.

Over at Brix Wine Shop in Boston's South End, Carri Wroblewski, who owns the store with business partner Klaudia Mally, says their customers are still predominantly in their upper 3Os to mid 5Os. Brix usually hosts two Cognac tastings annually, and the brands they primarily support are Pierre Ferrand, their bestseller, and Maison Supreme. Wroblewski comments that while her customers generally prefer their Cognacs and brandies neat, there are a few people out there experimenting with cocktails.

Drew Marcarelle, who owns Marcarelle's Package Store in Ipswich, contends that while Cognac is not exactly flying off the shelves, it is holding its own, depending on the time of year. "During the holiday season, it sells pretty well," he says, noting that domestic ultra-luxe brandy Germain Robin seems to be very popular. He stocks the must-have brands, such as Remy Martin and Martell, but also smaller artisanal houses, such as Pierre Ferrand and Michael Bonnin. Ipswich's growing Brazilian population buys a lot of brandy and Cognac, he observes.

FUTURE PERSPECTIVES Collectively, Cognac and brandy in Massachusetts could be poised for a promising future, depending on location and the type of venue concerned. As with most products, understanding your customer is key. Few people, having never tried it, would pay a lot of money for a bottle of brandy or Cognac regardless of how good they're assured it is. But if customers have an opportunity to sample it at an in-store tasting or a restaurant or bar promotion, the sale gets much easier. The same holds if a drinks menu is presented to guests after their dinner, as Nicas does at The Castle. More than just nickels and dimes, Nicas says this menu generates close to $8O,OOO a year. Not everyone has the same experience. "The popularity brought on by Hip-Hop culture is purely on fashion and being chic," says Jonas Atwood at Meritage. "There is virtually no appreciation or awareness of the subtle flavors, styles or singular characteristics found in many small batch Cognacs, as evidenced by the popularity of the larger, ambiguous brands," he adds.

And, although Gary Park sells a lot of Cognac and brandy at his shop, he expresses concern about rising prices. "I hope, as far as price increases go, they don't get carried away. Some of them in the last year have started to really trickle upwards and I hope they don't chase people off." Lloyd Foster also sees things from a financial point of view. "I think people slide up and down the scale of age, sophistication and what have you, depending on how the economy is. If it's really booming they may only drink XO or one of the better Cognacs, and if they're wondering if they're going to lose their jobs tomorrow, their next bottle may only be a VSOP or equivalent," he says.

Moet Hennessy's Baez-Goss sees the slow and steady climb of Cognac continuing "if only because consumers are much savvier in their consumption of premium spirits. Any consumer that experiences Cognac for the first time will know it's a unique experience that rivals the best vodkas of the world," she comments. As for domestic brandy, Justin Ames at Christian Brothers says, "Brandy itself has got incredible heritage. Everybody knows what brandy is so as a consumer gets older, we see them switching to brandies."

Brandy and Cognac may be a more challenging sell than some other spirits, but don't count the category out. The romantic mystique of Cognac and the interesting heritage of brandy, combined with innovative promotions touting their complex flavors, as well as Cognac's adoption by popular culture, will keep the category thriving. And there's certainly more than enough room in the crowded world of spirits like vodka, tequila and rum for brandies of all styles to make an impact and cash in on their own merits. Consumers who drink other top-end spirits are eager to try new things. They already appreciate complex tastes and aromas, and they would probably embrace high quality brandy and Cognacs. All it takes is a trusted gatekeeper: An enthusiastic sales person, bartender or waiter who piques their interest and offers them a delicious new drink that resonates with their love for the finer things.

Even Cognac needs to have some fun
Cocktail recipes that show the wild side of Cognac

Remy Centaur
2 shots of Rémy Martin Grand Cru
1 dash of lime juice
3 drops of Angostura Bitter
A few fresh mint leaves
2 spoons of brown sugar
Ginger Ale
Crush mint leaves with sugar and lime juice in an old-fashioned glass. Add Rémy. Fill with crushed ice and top up with Ginger Ale. Add Angostura Bitter and stir.

Remy Jasmine Tea
2 shots of Rémy Martin Grand Cru
1/2 shot of Galliano
4 shots of iced jasmine tea
1 dash of sugar syrup
Shake all ingredients with ice. Strain into a tall glass filled with crushed ice.

Hennessy Ginger Pear
1 3/4 ounces Hennessy
3/4 ounce pear juice
1 slice fresh pear
1 thin slice of ginger
Serve chilled, straight up.

Martell Cosmopolitan
1 ounce Martell VS
1 ounce fresh lime juice
1 ounce Triple Sec
1 ounce cranberry juice
Serve chilled, straight up.

The Courvoisitini
1 part Courvoisier VSOP
1 part DeKuyper Triple Sec
1/2 part sour mix
Shake ingredients with ice and strain into martini glass. Garnish with cherry.

Landy's French Orgasm
2 ounces Landy XO Cognac
3 ounces cranberry juice
1 ounce Pama pomegranate liqueur
4 dashes grenadine
Squeeze of lime
Stir all ingredients together, pour into a martini glass or champagne flute and rub orange zest on the rim of the glass.

CB Classic Cocktail
1 lemon wedge
Powdered sugar
1 and 1/2 ounces Christian Brothers Brandy
1/4 ounce cherry liqueur
1/2 ounce lemon juice
1/2 ounce triple sec
Rub the lemon wedge around the rim of a martini glass and dip the glass into a dish with the sugar. Pour the Brandy, cherry liqueur, lemon juice, and triple sec into a shaker and shake well. Strain drink into the glass, throw in the lemon wedge and serve.

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