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 The big four producers -- LVMH Moet Hennessy, Remy Cointreau, Pernod
Ricard and Beam Suntory have turned more of their attention to the
U.S. following a drop in sales in China after an anti-graft
campaign.
On its home turf cognac is seen as the drink of choice for mature
gentlemen but in the United States it is often enjoyed by
status-conscious revelers inspired by blingy bottles and hip-hop
name-dropping songs like Busta Rhymes' "Pass the Courvoisier."
Black culture's taste for cognac, which only comes from the area
around the western French town of that name, dates back at least to
the time when U.S. soldiers were visiting jazz-mad Paris bars during
the world wars. Back home it was an alternative to American whiskey,
often made in southern states with histories of slavery and racial
segregation.
The African American community accounted for nearly two-thirds of
all cognac drunk in the world's biggest market, say executives and
analysts. Yet that's now changing.
Producers of the drink, made by distilling white wine and aging it
in oak barrels for anywhere from two to dozens of years, now need to
reach other groups to help fill the space left by China.
"We don't want cognac just to be for one category of person," Remy
Martin Executive Director Augustin Depardon told Reuters during a
visit to the Cognac region, where over 75,000 hectares of vineyards
grow mostly Ugni Blanc grapes that become the building blocks of
cognac.
Depardon said a new campaign featuring Hollywood actor Jeremy
Renner, one of the stars of The Avengers, was aimed at a broader
audience.
'PRIORITY NO. 1'
Hennessy, Remy Martin, Martell and Courvoisier make 85 percent of
all cognac, and they are competing harder than ever, trying to
harness the current boom in "brown spirits" like bourbon and rum.
"We've seen a lot of our cognac competitors be more aggressive in
the United States, actually investing in media campaigns on a scale
we've never seen before," said Jean-Baptiste Rivail, Hennessy's
director of business development for the Americas. "The momentum of
Hennessy and brown spirits has attracted quiet players to play
harder in the U.S. market."
One of the quiet players is Pernod Ricard's Martell, which at 300
years old, is cognac's elder statesman. After pushing hard in China
to become the leading player there, the brand is now trying to lift
its 2 percent share of the U.S. market.
"It is going to be our priority Number One," said Christophe
Pienkowski, Martell's international heritage brand ambassador.
Initiatives include a new variety called Charactere, which Martell
hopes will help convert whisky-drinking Latinos, and a campaign with
The Roots, who have recently gone from respected hip-hop group to
household name as the official band for the U.S.'s Tonight Show
starring Jimmy Fallon.
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Cognac suppliers sold 4.1 million 9-litre cases in the U.S. last
year, according to the Distilled Spirits Council of the United
States, up 11.9 percent from 2013, which only saw a 3.7 percent
gain. It was the fastest-growing segment of a spirits market up only
2.2 percent, though from a small base. The trade group's economist
said this year may be even stronger.
Euromonitor forecasts U.S. retail cognac sales of $5.2 billion in
2015, up 9 percent from last year. That would see it surpass the
Chinese market, which it estimates will have lost 36 percent of its
value since a peak of $7.8 billion in 2012.
COCKTAIL CRAZE
The companies are also trying to push cognac into cocktails. While
brandy is the main ingredient for classic drinks like Sidecars and
Alexanders, it is not as prevalent on modern cocktail menus as
bourbon, tequila and gin.
To that end, Hennessy has launched Hennessy Black, which it says is
better for cocktails as it has a delicate taste that eases
mixability and a stronger alcohol content that can withstand
dilution.
"Cognac seems, in my mind, to have a rightful place in the cocktail
craze that hasn't been fully taken advantage of," said Rabobank
analyst Stephen Rannekleiv. "There's an opportunity to continue
making inroads in a demographic they have not generally had a strong
presence in."
Nielsen data for the most recent 30-day period suggests that white
adult consumers drank 27 percent of the nation's cognac even though
they represent 66 percent of the adult population. Black consumers
drank 40 percent, though they were only 11.2 percent of the
population.
Despite efforts to broaden their market, the brands will be treading
carefully so as not to alienate their core audience, having seen how
quickly Cristal champagne fell from grace in 2006 after a boycott by
hip-hop mogul Jay-Z, who is now a backer of Bacardi's new cognac
D'Usse.
"African Americans are still accounting for a huge part of cognac
consumption in the U.S. and this is still our main target with
D'Usse," said Philippe Jouhaud, sales and marketing director for
D'Usse.
(Reporting by Martinne Geller in London; Editing by Elaine
Hardcastle)
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