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Which brand is a bright spot for Cognac in the US on-premise?
On-trade consumers in bars and restaurants across the US are spending less on Cognac, according to the latest on-premise ordering data from Union, but one brand is bucking the trend.
Dollar sales were down from a 1.31% share of spirits to 1.29% in the 12 months ending 31 December 2023.
Growth has now stalled across the board for Cognac. By volume, Cognac represents just under 1% of all on-premise spirits unit sales, meaning that any reduction in sales is sorely felt.
Layne Cox, chief marketing officer at Union, explained: “Because Cognac’s unit share of all spirits is relatively low to begin with, this small drop in Cognac dollar sales is insignificant from an operator’s perspective. But, this drop does amount to a significant loss of share for Cognac producers.”
“This global slowdown in Cognac has been ongoing for a while,” said Spiros Malandrakis, industry manager of alcohol drinks at Euromonitor International. “The luxury segment is recession-resilient, not recession-proof.”
And Cognac producers are by no means “out of the woods” according to Cox, who said now is a “good time for Cognac brands to get creative with promotions and pricing, especially during uncertain economic times”.
Cognac sales have taken a hit, but one brand is still seeing growth. Known as one of the globally successful ‘Big Four’ Cognac houses, Hennessy is performing well on-premise, in large part due to successful promotions and price decreases.
Hennessy is the leading brand of Cognac at Union venues, taking in over 85% of all category sales.
Hennessy is taking share from all other Cognac brands, and much of its growth is coming from ultra-premium SKUs, which have dropped significantly in price. For example, Hennessy XO drinks dropped nearly US$3.00 in price to US$18.60 over 2023, and showed 22% growth for that item.
Union’s data indicates that Hennessy VS sales are slightly up in share growth and its higher-end VSOP and XO Cognacs are booming, showing a hefty points-share increase of over 20% each.
Union’s top Cognac brands are:
Hennessy
D’Ussé
Rémy Martin
Courvoisier
Pierre Ferrand
Across the top-selling brands, all are experiencing share decline except for modest increases for Hennessey and Pierre Ferrand.
D’Ussé, launched by Jay-Z in 2012, has a strong on-premise presence, with over 9% of Cognac sales share. However, the brand has experienced significant sales declines in 2023.
Nearly two-thirds of on-trade Cognac sales take place after 10pm, according to Union, and, as seen with Hennessy, premiumisation is key to the category’s success.
“Venues promoting ulta-premium brands in the late-night hours will likely see a nice sales bump when it comes to this category,” Cox said.
She added: “Based on resilient ultra-premium sales across Cognac brands, I think we can expect to see more limited editions, single cask releases, and more of the ‘rare’ releases, likely at very competitive price points, as on-premise guests continue to seek out the higher-end Cognacs, at least for now.”