In the March issue of National Liquor News, we spoke to Cognac and brandy brands about the allure of the category and collected some top tips for how best to retail their products.
In a retail landscape that continues to be driven by premiumisation, the Cognac and brandy categories are well positioned for success. The grape-based spirits celebrate all the elements that the premium customer is swayed by; heritage, craftsmanship, age and prestige.
And certainly on a worldwide scale, these customers are taking note, as demand has pushed Cognac through export growth for five years according to the Bureau National Interprofessionnel du Cognac (BNIC).
Like its sparkling wine sister Champagne, Cognac’s exclusive provenance draws interest from the Australian consumer. However, as we reported in 2019, Cognac sales account for just less than one per cent of total glass spirit sales. Without the same geographical restrictions, brandy sales are slightly higher, but still sit at only two per cent. But that doesn’t mean the category should be discounted, according to Insights Director at IRI, Daniel Bone.
“It’s easy to overlook the strong growth contribution being made to glass spirit sales in retail liquor by both Cognac and brandy. After all, total category growth is creeping towards 10 per cent YOY due to the ongoing surge in gin and vodka sales, the resurgence in blended scotch, and the ongoing popularity of Irish Whisky,” Bone explains.
Despite this, in the last year the combined dollar growth for both segments came to 11.8 per cent (bounding ahead of volume growth), which is a significant acceleration from the previous year when both volume and sales were in decline.
Pernod Ricard, which distributes Martell Cognac in Australia, has found this growth to be especially evident in the premium sphere. Xenia Charovatova, Brand Manager Luxury at Pernod Ricard Australia said: “Cognac remains a niche category still in the Australian market, however we see it growing year on year and increasing its relevance.
“Especially as all dark spirits in the super premium price segment are growing, consumers are willing to pay more for quality products. Martell is performing exceptionally well, growing ahead of the category.”
There is still great potential for premium shoppers to drive these growth numbers further upwards. Interestingly, Australian producers have recognised this, and are creating some serious competition for imported Cognacs and brandies.
Valerie Blayac, Director of Cerbaco Distribution which imports a range of Cognacs into Australia, said they’ve recently seen the first ever decrease of Cognac sales, as consumers seek out local options.
“Australian products are in demand and that can be applied to liqueurs and other spirits,” Blayac said.
Australian brandy producer St Agnes Distillery has seen this reflected in the category through the great performance of its products in the last year.
Matt Redin, Marketing Manager for St Agnes, said: “The entire range of St Agnes brandies have performed particularly well over the past year with our VS range up five per cent MAT and our luxury brandies; Bartenders Cut, VSOP and XOs, up 21 per cent MAT.”
Building momentum
One of the enduring barriers between the Cognac and brandy categories and their untapped growth potential, is the ability to shift mindsets in consumers who don’t understand what the spirits are, or how they can be used. Although they are spirits with a great historical heritage, they’re not just a drink for grandparents.
Vok Beverages understands the importance of this shift, being responsible for brandy labels TST Tolleys, Black Bottle and Twenty Third St Distillery, which even has a product called ‘Not Your Nanna’s Brandy’. Senior Brand Manager at Vok, Amanda Rice, said: “Awareness and shifting consumers’ perceptions are key to the long term success of the category.
“At the moment there’s real momentum behind the dark spirit category driven largely by consumers embracing whisky and we’re seeing a spin-off effect into brandy.”
This trend has influenced part of Pernod Ricard’s strategy to get more consumers to explore brandy, with the release of innovation, Martell Blue Swift. The VSOP aged in a Bourbon cask is going exceptionally well, and is described by Charovatova as a star performer for the brand.
“With Martell Blue Swift (MBS), we are trying to bridge the gap for dark spirits drinkers to try Martell. We had overwhelmingly positive feedback from the market on the taste profile of MBS, so it’s encouraging to continue growing it in Australia,” Charovatova said.
But all Cognac and brandy brands know that this technique isn’t enough to sustain long term growth and interest in the category, and education is always paramount.
Blayac said Cerbaco: “Are doing a lot of tastings in-store and offering masterclasses to customers and staff as training. Through all this training, we try to explain the making, the history and how to drink and use [Cognac and brandy].”
Similarly, St Agnes maintains sales momentum through education, and Redin said it will be a core focus of the year ahead for them.
“We will continue to run masterclasses around the country for both trade and consumers to really drive home the message that brandy really is a drink they should take more seriously and not relegate to the bottom shelf,” Redin said.
Just like with any new skill, when consumers first start experimenting with Cognac and brandy, they might not have much confidence. Encouraging consumers in this way forms part of Vok’s approach. Rice said in the last year they’ve focused on a small format strategy, which has returned triple digit growth. She said: “As a result, we’re seeing consumers trade up to our 700ml range as they become more confident in their purchase decision.”
Tips for retailing success
Although Cognac and brandy require a little more work on the education front, capitalising on the potential of the category in-store can really pay off. As Bone describes: “The segment commands a premium with an average price per litre that is 2.6 times higher than the glass spirits average.”
Cerbaco knows that while brands themselves work hard on the education front, the best approach is a coordinated one. Blayac recommends piquing customer interest with tales of immense craftsmanship and complex aromas. She also said: “Talk about the history of family behind any product. All of these products have been made by passion and the famous ‘Savoir Faire’.”
Redin agrees, and said retailers should also encourage sampling of Cognac and brandy products in serves that best showcase them.
“Encourage customers to taste them, especially neat where the delightful, concentrated fruit characters can be explored,” Redin said.
Charovatova said more thought should be given to the retail experience in the category, to allow Cognac and brandy products to catch the attention of customers, and therefore deliver sales growth.
“Cognac has an amazing potential to be big in dark spirits and shouldn’t be underestimated despite it being relatively small compared to larger categories,” Charovatova said.
Redin concurred, and added: “Move it up from the bottom shelf. Don’t just stock a cheapie, expand the range to include some more premium spirits.”
The Cognac and brandy categories have been one of the most consistent performers in retail liquor over the past few years. With no concerns of this changing, supporting the growth of the category moving forward is bound to bring some great results.
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