Changes Coming toBy Garrett Peckcognac

A Shifting Category Although the overall brandy category isbarely keeping up with the rate of inflationin the U.S., Cognac sales are edging slightlyhigher. According to the Adams LiquorHandbook 2005, the category grew 5% to3.6 million cases, yet this is a niche productcompared to whiskey and vodka, each ofwhich sold more than 45 million cases. Thetop four Cognac brands are:

HENNESSY(Moët Hennessy USA)

REMY MARTIN(Remy Cointreau USA)

COURVOISIER(Future Brands)

MARTELL(Pernod Ricard)

Hennessy is the category king – both theleading Cognac, as well as the largest grow-ing brand. But senior brand manager DexterKing joked, “Being the biggest Cognacbrand is like being the tallest midget.”Hennessy is growing by positioning itself dif-ferently. “We look at Grey Goose, Patrón,and other luxury brands as our main compe-tition – not other Cognac brands.” Thestrategy is paying off: Hennessy was ranked83rd on BusinessWeek’s top global brand listin 2006.

Although ranked second in the overallcategory, Rémy Martin focuses on its highergrade VSOP, which was the fastest-growingpremium Cognac in 2005. “We’ve histori-cally been known as a trade-up Cognac,” cat-egory director Steve Hissam said with pride.

The Changing ConsumerThe African-American community hasfavored and supported the growth of theCognac category for five decades. Since theearly 1950’s, many prominent musiciansand rappers have come of age with the spir-it. Abegail Domond, brand manager forMartell, notes that the typical consumer ismale, African-American, and 35 to 54 yearsold. Yet importers are now trying to make itmore inclusive and seeking a broader rangeof consumers. Some note that Cognac isexperiencing growth in Hispanic and Asiancommunities as well.

The “very special, old and pale” (VSOP)Cognac originally brought back to the Kingof England by his agents was from the

region just north of Bordeaux, France. Cognac hasbeen a beloved spirit, favored by Napoleon Bonaparte,nobles in smoking rooms across the Continent, and ofcourse, kings. But the spirit has fallen on hard timesas Europe’s nobles faded away, leaving the categoryas a niche product long forgotten by most consumers.But new minds are at work, and Cognac may be aturnaround play in the years ahead.

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Alizé was introduced in the U.S. overtwenty years ago as hip-hop entered main-stream culture, and helped to make Alizépopular. Brand director Michelle Murraysaid, “It’s just a matter of reinvigorating thebrand with new messaging and remindingpeople that we’re still here.” Alizé is win-ning new customers by targeting women,and emphasizing Cognac’s mixability.

Like Alizé, Hine Cognac appeals to thefemale consumer. According to R. JohnPellaton, president, Hine USA, “Hine isconsidered more floral and feminine thanthe major brands and it has always been saidto be one of the only Cognacs that womenlike to drink.”

And Cognac makers are positioningCognac as a trade-up product. “Trading upis what consumers are doing across theboard – in fashion, in vodka, in tequila, andin Cognac,” said Hissam of Rémy Martin.“The biggest change is that Cognac is nowpart of contemporary cocktail culture andappeals to younger drinkers. Similarly, theoccasions have expanded beyond the tradi-tional sip-and-savor moments to ‘guys nightout’ on the town.”

Hine Cognac has recently introduced Hby Hine, a “VSOP in a Bordeaux bottle thatis more like a contemporary spirit brandthan a revered aged Cognac,” Pellaton says.“We use the analogy that H by Hine is‘Hine with Attitude’ - a bit like the newgeneration who express their contemporaryvalues but stay within the family that havegiven them their heritage.”

Landy Cognac is a new brand workinghard to reach younger consumers “by bring-

ing Cognac back into the cocktail and growit as a category,” according to Jean-FrancoisBonneté, national director of CognacFerrand USA. “For the younger consumer,the number one buying stimulus is price.We need to be fresh, hip, cool, exciting, andalso affordable.”

Alberto Beraha, VP, BerNiko LLCagrees with Bonneté regarding price beingan attractive lure for the younger, moreinexperienced Cognac consumer. He says,“Ibis XO is trying to give the consumer atrue brandy experience.” Since Ibis XO isproduced in Cognac, France by true Cognacproducers, he adds: “This quality productalong with a great price will attract ayounger consumer, who might not have thepalate yet to begin with Cognac. With IbisXO, they are able to try brandy first andthen grow their taste buds for Cognac.”

Marketing Cognac Many Cognac producers are demonstratinga significant shift in how they are marketingtheir products. Category leader Hennessyis marketed as an aspirational brand, and itslead over the other producers has widened.“We’re positioning ourselves as a lifestylebrand,” King explained. “To sell it only as

Cognac is a mistake. We have to competeagainst non-Cognac products like PatronTequila.”

Bonneté echoes this sentiment saying,“The marketing action of Landy Cognac isdigital and viral. Our goal is to makeCognac a strong alternative to importedvodkas, tequilas and rums in the U.S.” Byworking with renowned mixologists, hesays, “We have tailored some fresh andsophisticated cocktails which are already

starting and will more and more be featuredin some accounts across America.”

Hennessy is looking beyond the tradi-tional Cognac market to continue itsgrowth. It sponsors a polo team in theHamptons, and promoted a major concertin New York in October with Kanye Westand the Strokes to stress Hennessy’s mixa-bility with music. Hennessy is also hostinglocal market events, such as mini tours inmajor markets by invitation-only. “We’repushing the entire range of Hennessy,though VS is the juggernaut,” King said.And it has sponsored an ad campaign fea-turing actor John Leguizamo.

In 2005, Fortune Brands acquiredCourvoisier when they split Allied Domecqwith Pernod Ricard. The brand manager,Allen Spence, noted Fortune’s emphasis inmaking Courvoisier more inviting to con-sumers. “Fortune Brands is moving the nee-dle for us,” he explained, noting how tast-ings and training are key to their strategy.Courvoisier brought over a brand ambassa-dor from France. They’ve found that everyperson they connect with is not only a newconsumer, but will also spread word of theproduct. Tastings stress Courvoisier’s mixa-bility, and women are responding positively.

Courvoisier sponsored two VIP eventsin 2006: the Official BET Awards AfterParty on June 27th, and a reception at theHouse of Courvoisier during the NBA AllStar Weekend. They also held an “UpgradeYour Style” sweepstakes to stress the brand’saspirational nature.

Rémy Martin launched a slough of mar-keting programs. It promoted Black MusicMonth with XXL Magazine, and awardedLucy Liu, Dr. David Ho, and Quentin

“Hennessy is looking beyond the traditional Cognacmarket to continue its growth. We look at GreyGoose, Patrón, and other luxury brands as ourmain competition – not other Cognac brands.”

–Dexter King, senior brand manager, Moët Hennessy USA

Hennessey campaign ad featuring John Lequizamo

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FPOBerniko

Ad

Tarantino at the 5th Annual Rémy MartinXO Honors for their contributions to theAsian community. The event was watchedby 15 million households.

Hpnotiq has aggressively positioned itselfas highly mixable through trade and bar-tender education. Justin Ames, senior brandmanager, Hpnotiq and Christian BrothersBrandy says “that its most visible demonstra-tion is with the consumer media, which fea-tures cocktails and recipes.” He also adds that“it’s a highly-mixable product, enjoyed in aclub or style lounge. ‘It’s Hpnotiq,’ is really alifestyle message, where consumers are seek-ing out the Hpnotiq Martini, The Breeze orThe Hulk.”

The “Rise Above” campaign wasMartell’s signature program that focused on“enhancing brand image to be more upscale,modern, approachable and relevant,” saidDomond. Martell XO debuted new packag-ing, and also launched Martell Noblige – “astylish alternative that is a step above VSOP.”To enhance Noblige’s upscale image, theyheld the Noblige Best Dressed Man contest.

Alizé is heading up a marketing cam-paign called “Go On! Alizé”, and engagedradio personality Wendy Williams as theirexclusive national spokesperson. “Wendywill be making appearances throughout ourmarkets to promote the brand and help bringAlizé to life in contexts that are relevant toour consumers,” explained brand directorMichelle Murray.

Optimistic About the Future Cognac is a niche category, one that mostAmericans simply ignore. Ansley Coale of

2,000-case Maison Surrenne shakes his headin dismay at the category’s status. “Restaurantsare far more likely to know what Scotchesand Bourbons they carry, but have no ideawhat kind of Cognac is on the shelf.” It hasa long way to go before it reaches widespreadappeal, and this will take years of highly tar-geted promotions to reach a new audience.

Those that are having particular success– the Hennessy’s of the world – are successfulbecause they are positioning their productsagainst other categories, rather than otherCognacs. Or they are finding new ways ofusing the product, such as in mixed drinks.The Cognac liqueur Grand Marnier hasteamed up with Jose Cuervo Tequila to mar-ket the Grand Margarita, noted brand direc-tor J.C. Iglesias.

Todd Voigt, marketing manager, spirits,Barton Brands Inc., says that Meukow hasrecently demonstrated high quality innova-tion with the first Vanilla Cognac and otherflavored products. “The new generation ofCognac drinkers brings their own style anddesire for unique high quality products that

express individuality.” The key to growingthe category, he believes, “is in understand-ing that our drinkers are savvy consumerswho need variety. Cognac will continue togrow as we provide different occasions andoptions for enjoying our fine products.”

Martell’s Domond is optimistic about thefuture. “Cognac is a clear example of how tar-geted efforts can transform a product steepedin history and heritage into a contemporaryproduct that appeals to a range of consumersacross all demographics while not sacrificingits traditional consumer base.” Allen Spenceof Courvoisier agrees with that. “Be on thelookout for us in 2007 and beyond!” �

“Cognac is a clear example of how targeted effortscan transform a product steeped in history andheritage into a contemporary product that appealsto a range of consumers across all demographicswhile not sacrificing its traditional consumer base.”

–Abegail Domond, brand manager, Martell

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