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Cognac: In It for the Long Haul

by Ian Buxton

Perhaps it was because of the weather, which even the natives thought hot. Or perhaps because almost everyone I spoke to was in pre-holiday mood, preparing for France’s traditional August break.

Rémy’s Louis XIII in the cellar.

Or perhaps, when you have hundreds of years behind you, when you have survived wars, recessions, invasions and, for all I know, flood and pestilence, the small matter of the wholesale collapse of your major market can be treated with a certain stylish insouciance. After all, the Cognac industry has survived worse things and if Far Eastern markets don’t want the spirit this year it can always stay in the barrel maturing gently and getting more and more valuable for when it is eventually needed – after all, the Rémy Louis XIII that I was fortunate enough to sample may have aged for close to a century.

So talking recently in France to a number of houses, both large and small, the impression I gained was one of resilience and, strange to relate, quiet optimism. No one was exactly pleased by the declines in China but it clearly wasn’t quite the apocalyptic event that you might have come to believe.

To take one example, Rémy-Cointreau may have reported a less-than-stellar first quarter but expects to report increased operating profits in the current fiscal. And as one door closes, another opens. As Olivier Paultes, Hennessy’s Head of Distilleries, told me “Some markets that have discovered Cognac pretty recently are rapidly changing, like Africa, with particularly important markets such as Nigeria and South Africa; [the] same [is true] with markets in Asia such as the Philippines and Malaysia. The Cognac market is in constant evolution: Traditional markets discover a more modern consumption through cocktails, but also on ice or with a drop of water as many years ago—la fine à l eau.”

“This development drives us to constantly question ourselves,” he added and to “meet new consumption patterns, new places, and new consumers.” Hennessy, of course, hold the proud distinction of creating the XO style and has enjoyed a long association with the U.S. rap and hip-hop music scene.

Maison Hine on the river Charente.

Such thoughts were echoed precisely by Hine’s Sales Manager Per Even Allaire who responded in similar vein to my questions. “One of the interesting trends that Cognac has been benefiting from is the qualitative cocktail wave which started in the U.S. and that seems now to be taking over Europe and Asia,” he said, describing this as “a great way to introduce Cognac in an easy and approachable way.”

According to Allaire, the key trend seems to be to greater sophistication in the market, with “more and more of the consumers becoming really discerning and looking for more than just brands, in other words products with quintessential quality and heritage.”  He also identified as one of the main issues for the future is being able to find the right balance between changing absolutely nothing about the quality of a product and its heritage, whilst “the same time being able to re-invent oneself, or at least innovate as much as possible, respecting one’s DNA.”

“Consumers,” concludes Allaire “are getting educated and looking for qualitative products, but they also constantly seek novelty.”

Like their near neighbors Delamain, famed for their long aging and delicate flavors, Hine is probably better known in the U.K. than the U.S. Connoisseurs should seek out these brands however, for Cognac of rare subtlety and grace.

But encouragingly, several of the executives that I met pointed to the U.S. as Cognac’s rising star. In the Martell archives, I was able to see their first recorded order from the U.S., originating from Philadelphia and dating from February 15, 1783.

The U.S. is a key growth market for historic Martell.

With such a heritage some turbulence in markets can perhaps be seen as the natural course of business. Certainly, Hugues Le Marié, Martell’s Category VP for Cognac in the U.S., is upbeat about prospects but first wanted to stress his company’s 300-year history, pointing out that for at least ten generations “the men and women of Martell passed down their unique know-how and values such as the art of craftsmanship, the art of tasting and the art of gastronomy. We have always stayed true to our values and international mindset—these have guided us to where we are now: the second largest Cognac in the world, sold in more than 130 countries.”

For the future, Martell has an ambitious approach aiming to invigorate existing businesses in Asia and seeking to conquest new markets.  The U.S. is clearly a key growing market for Martell, with Cognac one of the most dynamic among the wine and spirits categories in the U.S. this year.

As Hugues Le Marié explains, “Martell VS is targeting the African-American community; the Martell Caractere (VS+) has been launched to reach a new segment of consumer—the discerning Hispanics who are currently drinking more whisky—and convert them to a more refined yet full of character proposal; [and] lastly Martell Cordon Bleu and Martell XO segments are targeting the Asian community, Martell being the clear leader of this segment.”

But in my conversations, large or small producers alike continually pointed to growing consumer knowledge, connoisseurship and a demand for authenticity which Hine’s Allaire saw as “a very positive trend for Cognac in general, which is directly linked to its AOC and terroir”—and smaller houses in particular with their ability to offer very specific expressions with distinctive pedigrees.

Château du Plessis is the home of Camus Cognac.

At Camus, where I was able to explore their unusual barrel regime for the Extra Dark & Intense expression, Anne Blois, their Global Commercial Director, was philosophical. "We are not expecting—in the mid-term—any exponential growth of Cognac high-end category thanks to a single market as it was the case in 2011 with China. Today there is no miracle market waiting to take the lead on the higher quality expressions. Yet, there are still some emerging markets for the VS categories [and] our strategy tends more to be one of strengthening our presence in the mature markets—such as China and more largely Asia—and to build from there. The U.S. is also a key vector for development as we have recently settled there.”

Camus Extra Dark and Intense.

Look for their exclusive and very classical ranges such as Borderies XO & Île de Ré Cognacs, star products like Extra Elegance, high-end collections including the Rarissimes & Masterpiece Cuvées, and new initiatives such as Extra Dark & Intense. This latter is filled into specially toasted barrels which have been treated to create a cask surface, pitted and cratered like the crust on a crème brûlée. The effect is to caramalize the surface of the cask and deliver intensely spicy notes in the Cognac, which is dramatic and, as the name suggests, intense.

In the end, though, longevity adds an enviable lustre to any brand. As Le Marié concluded: “In 1849, Martell was already exporting in South Africa [and by] 1912 to Nigeria for example, and since 2010, the Cognac category [in Africa] shows an exciting double-digit growth.

So perhaps it was more than the sunshine putting a smile on my hosts’ faces.

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