Cognac Must Ditch Generic Branding

Recent figures released by the BNIC appear to give nothing but good news for the cognac industry. Record shipments in 2015 saw an increase of 8.5% by volume and 21.3% by value. However, over half of total cognac sales were of the youngest VS variety and volumes of older cognac sales fell. Some of this was undoubtedly due to the ’China Effect’ but there are other factors too. Strict rules on the production of cognac can restrict product development. Regulations do protect traditions but they can also reduce competitiveness. VS and VSOP cognacs often find themselves vying for shelf space with other fast growing spirits, such as rum.

According to Hine’s CEO, there is a need to diversify the product by stepping away from traditional blends and focussing on ‘micro-provenance’. Our own David Baker  agrees, calling for a radical revaluation of marketing tactics and a move away from generic branding to offer greater individuality (See The Spirits Business, 6 Sep 16). He adds that we must be careful not to lose the traditional values of cognac – a sentiment echoed by the Global Director of Courvoisier who said “I don’t think there has been a lot of communication about how cognac is produced …. and why it is worth paying more for it”. Very much our view. Driving sales along the volume market route may provide short-term success but will threaten the uniqueness of the product. For cognac to remain a luxury spirit, a fresh industry approach based on increasing value not volume sales is required – take a look at our cognacs – all have age statements.