As the economic boom times continue, the good news in the spirit business is not limited to the double-digit growth in imported vodka and tequila. And it’s not being driven by the cocktail craze alone. The grape-based liquors, brandy and its best-known premium French version, Cognac, are surging as well, and depending on where you stand, they’re doing better than might be expected.
After all, while much attention has been paid to the ultra-premium end of the brown spirit business, the core story is hard to avoid: whiskies, whether made in Scotland, the U.S. or Canada, are struggling to stay strong in the face of historic lows. Connoisseurs may be willing to indulge in single-barrel and multiple-wood aged brands, but the impact on the general market has arguably been mixed.
But the brandy and Cognac category has continued a steady growth rate since 1994; in fact, growth in Cognac has dramatically outpaced other distilled spirits for the last decade, and last year the top five brands posted an 8.5% increase. According to the Cognac Bureau, the U.S. is the largest market worldwide for Cognac for the sixth consecutive year, consuming 27% of the global market.
“Americans have realized that served straight, over ice, with soft drinks or fruit juices, or as a splash in coffee, Cognac is truly a drink for their lifestyle,” said Claire Coates, the Bureau’s director of communications.
Brandy sales growth has been more modest (3.4% last year, according to Adams Business Media Liquor Handbook 2000), but it’s still a bright spot compared to shrinkage in Canadian, straight, blended and Scotch whiskies.
The growth is at least partially fueled by Cognac’s luxury mystique, and nowhere is that more relevant than in Las Vegas.
“Obviously, we’re fortunate enough to get the kind of guests who are not at all concerned about the prices of say a Hardy Perfection or a Remy Louis XIII,” says the Bellagio Hotel’s beverage specialist Tony Abou-Ganim. And while even in such a pleasure palace as the Bellagio, not every single bar and restaurant stock Cognacs that sell for $375 per glass or more (some are much more), such restaurants as Picasso and Le Cirque do tend to offer the rare, highly-allocated and expensive Cognacs and brandies.
“Our guests like to call for a brand, to pick something special, and there is a lot of trophy ordering,” he says. Even though an XO Cognac from a quality producer may be a great beverage and available at a much more favorable price than the ultra-premium marques, customers on a winning streak and with a wad of cash will likely opt for the highest prestige, says Abou-Ganim, much the way other customers looking to celebrate may order Dom Perignon champagne and bypass good or better selections listed at lower prices.
But Cognac’s mystique is something not generated by many other spirits, and that sometimes generates odd behavior. Abou-Ganim recalls the day a bartender approached him with an odd question; how much should he charge for a partially full 1.75 liter bottle of Louis XIII? At the bar sat a man pleased with his luck sat , sipped and grew more and more enamored of the beautiful bottle. He decided he must have it then and there, even though Louis XIII was available at a retail outlet in the hotel, and the restaurant would charge him a by-the-drink price. Quickly calculating the cost, Abou-Ganim suggested $5,000 or $6,000. The bartender thought he could do better, and was right; he soon returned with $7,500 of the high-roller’s wad.
But for most operations not operating in the midst of such opulence, Cognac will always be a hand-sell. Peter Salchow, owner of Chicago’s swank mahogany, brass and marble mansion Biggs, stocks numerous Cognacs, but says customers in this category are being steered mostly by the big-time marketing spenders. “Most Americans are driven by advertising dollars,” he says. And with Hennessy, Courvoisier and Remy Martin dominating the spending in the category, they’re the brands that get the most calls.
Competitive Media estimates Hennessy spent more than $15 M in 1999 on advertising; Remy neared a $4M spend, while Courvoisier came in third with $2.6 M. By contrast, Hine, a well-respected Cognac, spent only about $73,000.
Courvoiser has targeted women as a potentially lucrative marketing target, but at Biggs, Salchow said, he sees few women interested in Cognac But does see more younger customers willing to experiment as their tastes change. Cognac cocktails don’t seem to be making any impact at Biggs, though, he says.
“Cognac is something that people don’t order casually; they don’t see it like a cocktail, which a bartender can suggest to them something,” he says. And consequently he doesn’t stock an trophy array of brands. While he likes such under-noticed brands as Delamain, A.E. Dor, Frapin and Camus (a major player in Europe), these brands are hard sells in the US. “You can’t go crazy and stock them all. You need to be practical about your inventory.”
But with Cognac so strong, new brands have followed recent line-extensions into the U.S. market. Most notable may be a sort of retro-introduction; based on the success of Alizé and Alizé Passion Fruit, Kobrand has created and introduced Alizé VS and VSOP Cognacs recently in a big move to expand their market.
They’ll need to fight hard to make a dent; the astonishing growth of Hennessy (up more than 100% since 1994) and the continuing concentration on marketing to African-American, Hispanic and other “ethnic” markets has encouraged other brand marketers. Recently, for instance, Courvoisier has hooked up with entertainment and fashion entrepreneur Russell Simmons of Def Jam Records and with such stars as Missy Misdemeanor to promote the brand.
BRANDY MAKES A MOVE
While much of the growth in American brandy has been assumed to come from off-premise, clearly not all the growth can come from stores and supermarkets.
In fact, Susan Overton, director of marketing, Heaven Hill, says brandy drinkers have a remarkable brand loyalty that carries through wherever the venue. “Brandies in general are very popular, and consumers are very, very loyal, whether they are drinking at home or at restaurants and bars.”
Since taking over Christian Brothers from UDV more than a year ago, Heaven Hill has found that the brand has a strong following in classic cocktails in some regions. “In Wisconsin, where brandy is so strong, if you order a Manhattan or an Old-Fashioned, it’s made with brandy; you have to call for bourbon or Canadian if that’s what you want the drink made with.”
(While the midwest is traditionally a strong brandy market—Wisconsin and Minnesota are the second and third largest per capita markets, headed only by Washington, DC—the African-American and Hispanic consumers continue to be a major focus for marketers, especially in such urban areas as Chicago, Boston, Minneapolis, and much of California.)
Overton said she’s hearing from many on-premise accounts interested in building their brandy business through classic cocktail promotions, and says Heaven Hill has customized promo programs available and is trying to grow Chrisitian Brothers VSOP. “It’s probably our biggest growth brand on-premise,” says Overton.
Overton, like others busy in the brandy business, says it’s important now for operations to check their shelf selection practices, as the category continues to grow; even small places which may have stocked only one or two brandies and Cognacs may need to expand their offerings to keep up; that’s where the marketing battle will take place. (While not a Cognac powerhouse, Heaven Hill with four brandy brands, is the second-biggest distributor in the brandy/Cognac category, behind powerhouse E&J Gallo with 21.8 percent, and just ahead of Hennesey importer Schieffelin & Somerset at 16.8 percent.)
Peggy Fox, marketing director, brandies and desserts for Canandaigua, says while some trade-up and -off is found between brandy and Cognac consumers, the two markets seem distinctly different. With brandy holding lower price points, and Cognac often seen as a celebratory beverage, the two sub-categories seem to be aiding each other rather than competing, as consumers switch back and forth because of life-style changes, economic considerations and other factors, most marketers say.
Meanwhile, Canadaigua’s Paul Masson Grande Amber will likely top 1 million cases this year, closing in on second-place Christian Brothers; category leader E&J (E&J Winery) has fallen back to pre-1994 levels, although it still nears 1.8 million cases annually. Canandaigua (soon to become Constellation Brands) is doubling down with the introduction of the just-released Grande Amber VSOP—a blend of American brandy and French Cognac that can be seen as a bridge product between the two, says Fox.
The new brand is meant to give strict brandy drinkers a chance to play the same game Cognac drinkers do, says Fox. “People like to impress other people, and one way they can do it is to show that they have money in their pockets.” Grande Amber VSOP, with a higher price point, is meant to give loyal brandy drinkers a chance to do just that. Some initial on-premise support, like back bar glorifiers, are planned, but the major support is coming through strong ad placements in Esquire, GQ, Playboy, Sports Illustrated and other male-focused magazines.
Cognac by the Letters
While Cognac makers are expanding their high-level bottlings and are creating special blends that are not age-designated, most Cognac production sold in the U.S. is delineated by age or region. Cognacs tend, with few exceptions, to be blends of eaux-de-vie of different ages, and the letter, star and name designations are connected to the age of the youngest ingredient.
VS (Very Superior), also sometimes known as Three Star, indicates that the youngest eau-de-vie in the blend is not less than 2.5 years old.
VSOP (Very Superior Old Pale), VO (Very Old) and Réserve , indicates that the youngest eau-de-vie is at least 4.5 years-old.
XO, Napoléon, Extra and Hors d’Age indicate that every eau-de-vie in the blend is at least 6 years old.
Fine Champagne indicates that the finished Cognac is a blend from the two premier Cognac districts: Grand Champagne and Petite Champagne. At least half of the blend most come from Grand Champagne.
California, Here They Are
For some brandy aficionados, the excitement isn’t all in France; it’s in California. The Bellagiois Tony Abou-Ganim favors some of the hard-to-source Germain Robin efforts, like Perfection and the 17-year-old Anno Domini, both of which he carries at some of the hotelis better bar and restaurant locations. But as good as hand-made brandies–such as the California boutique brands and small distillery Cognacs with cult followings—are reputed to be, the service problem is making the match between educable customer and the spirit. “A lot of times, cognacs are a trophy purchase, and customers want to spend on the most expensive rather than try something that we happen to be able to get because of our position in the market,” he says. As usual with new, rare or unsupported products, hand-selling is required to make the sale, says Abou-Ganim.Beside Germain Robin, the better-known California boutique brandy makers include Domaine Charbay, Jepson and RMS Distillery. The boutique distillers are creating single-still copper alembic brandies, and some use Pinot Noir and other premium grapes in addition to the traditional Ugni Blanc, Folle Blanche and Columbard. RMS, for instance, distills Chenin Blanc, Muscat and Palomino as well as Pinot. Germain and RMS, like the other distillers, have reasonably priced brandies but they are hard to get in many markets. Other options for operators looking to build niche brandy business include single-distillery Cognacs by Hennessey, and single-region products from Louis Royer and Pierre Ferrand.
Something Old, Something New
While in Cognac, locals are as likely to drink their VS spirit with a bit of ice and some tonic water, there are other ways to make brandies and cognacs and a bit more accesible to those put off by the traditionalist’s snobbery. At the Bellagio Hotel in Las Vegas, for instance, the annual cocktail competition among bartenders was won in a surprise by a cocktail using Hennesy Cognac. Here’s the drink, created by the Bellagio’s Darren Wes, along with some old-favorites.
1 1/4 oz. Hennessey VS Cognac
1/2 oz. Cointreau
1 oz. fresh ornage juice
1 oz. fresh sour mix
2 dashes orange bitters
splash raspberry syrup
Shake the first five ingredients over ice. Strain into a Martini glass and gently add the raspberry syrup so that it sinks to the bottom. Garnish with lemon and orange twist.
1 oz. light rum
1 oz. Cointreau
1 oz. brandy
1/2 oz. lemon juice
Shake all ingredients over ice. Strain and serve in a Martini glass.
1 1/2 oz.cognac
3/4 oz.lemon juice
Shake over ice. Strain and serve in a sugar-rimmed Martini glass. Garnish with a lemon peel.
2 oz. brandy
1/2 oz.white creme de menthe
Shake with ice. Strain and serve in a cocktail glass.
1 oz. lemon juice
1 oz. cognac
1/4 oz. green Chartreuse
1 dash Angostura bitters
Shake all ingredients over ice. Strain and serve in a Martini glass or on the rocks. Garnish with a lemon peel.
2 oz. brandy
1 oz. Campari
1 oz. lemon juice
Shake the ingredients over cracked ice. Strain and serve in a Martini glass with a lemon twist.
2 oz. brandy
1 oz. Campari
1 oz. lemon juice
Shake Campari and lemon juice with cracked ice and strain into a chilled cocktail glass. Heat brandy and when warm, ignite it and pour in a flaming stream into the glass.