Cognac Market: Major Trends
The recent major consumption trends shaping the global cognac market include the revival of the cognac market, the highest share of VS (Very Special) cognac in the market, the consumption of cognac with food, China becoming one of the largest markets, and its association with the African-American urban culture. The details for each of these trends are given below.
Revival of the Cognac Market
After experiencing a decline in sales during the last decade, the cognac market is going through a revival phase globally. Specifically, the sales in the US market have skyrocketed during the last two decades, reportedly supported by its "close association" with rap and urban music. Examples of artists being associated with brands include "Jay-Z with Bacardi’s d’Usse, T.I./Tip with Rémy Martin and Snoop Dogg with Landy." Rapper Ludacris launched his own brand, named Conjure in 2009.
Cognac consumption owes its largest share to the consumption of VS cognac. As of Q1 2017, VS (Very Special) and XO (Extra Old) cognacs have experienced growth in sales, specifically +11.4% and +16.8% respectively. This growth is, in part, due to the cocktail industry, as VS is an ingredient in aromatic and rich cocktails in the US. Since VS is a type of cognac, it can be found with all cognac brands and we didn't include examples of brands leveraging VS for their marketing strategies.
Consumption with Food
It has been observed recently that cognac is being used with food, and as a cocktail mix. This is because cognac is believed to be the "King of Digestifs" by some. Digestif is "an alcoholic drink enjoyed after a meal that, so we’re led to believe, helps our body digest the food." Although we were unable to find specific examples of cognac brands marketing their products as digestifs, there has been an increase in global cognac producers branding their products "as either a fusty after-dinner drink or something that people drink to show off rather than savor."
The markets in China have contributed heavily to the growth of the global cognac market. This is fueled by the increased personal consumption of alcoholic beverages by Chinese consumers. To cater to this trend, cognac brand Rémy Cointreau offered more affordable "Club" and "1738 Royal Accord" bottles (between $70 and $100) to the upper-middle class.
Association with African-American Urban Culture
The association of cognac with the "African-American urban culture" has improved its market in Africa. Countries like South Africa and Nigeria, where sales are improving at a fast rate, strongly follow the urban culture in the US. This has also led to an increased cognac demand in these countries. Hennessy, the largest US cognac brand, was recently associated with Nas, apart from other rappers in the past.