Buoyant US fails to halt Cognac slide

Global Cognac exports saw another dip in 2014 as the category came up against “a conflicting and unstable economic backdrop,” although the category pointed to signs of recovery.

Export figures for 2014 released this week by the Bureau National Interprofessionel du Cognac (BNIC) show a 3.6% drop in volume on last year’s figures to 155.6 million bottles. Value exports slid slightly but remained above the two billion euro threshold passed four years ago at €2.1 billion.

However, after reporting further declines in the middle of last year, the BNIC noted improved volume figures for the period between August and December 2014, which came in “at the same level as 2013.”

In line with recent export reports, much of the category’s growth continues to be driven by North America, where volumes over the last year rose by 12.2% with a 7.9% rise in value. The US put in a particularly strong performance, firming up its position as the number one export market for Cognac at 59.9m bottles.

With 98% of Cognac production exported, North America currently accounts for 38% of these volumes, followed by the Far East at 30% and Europe at 25%.

The BNIC noted a “tumultuous” year in its second most important market the Far East, where the ongoing Chinese luxury slowdown saw exports for the region as a whole shrink by 17.4% in volume and 21.6% in value.

Nevertheless the BNIC maintained: “Cognac industry professionals remain certain of the significant potential of these markets – particularly China.”

There was also a negative picture for Europe, where exports fell by 8.2% to 39.5m bottles, with an even bigger slide of 21.4% in terms of value. Commenting on this situation, the BNIC noted: “The difficult economic conditions which have impacted the region suggest an imminent return to commercial growth in the category is unlikely.”

Despite these areas of concern, there was strong growth from “new” markets, which accounted for 9.5m bottles, an increase of 12.9%, and a 17.1% rise in value exports.

In particular, the BNIC observed: “Some sub-Saharan countries are seeing significant economic growth which is opening up new commercial opportunities.”