ONE WAY OR T'OTHER there’s a lot going on in the Cognac arena. There are acquisitions – Rémy acquired Larsen at the tail end of 2012 and then in June this year sold the Cognac house on to Altia while, after six months with the For Sale sign flapping outside its GHQ Hine has at last found new owners.
Amid all the to-ings and fro-ings France’s most famous eau de vie has, aside from 2009, weathered the global economic crisis quite well – shipments were up more than 3% last year reaching a record 168 million bottles and, significantly, value was a whopping 16-plus per cent a head thanks in part to a strong showing in Asia – where shipments were up by 7.5% in volume and almost 23% in value (BNIC). Indeed, the region now accounts for more than 50% of exports and, in value terms, China is Cognac’s number one port of call in the world.
But, and it’s a big ‘but’, change is in the air. For starters, China’s economic growth is slowing and the government has clamped down on political bribery and corruption which is making life tougher for Cognac in much the same way that Scotch got a battering when business entertaining effectively came to an end in Japan. Added to this, patterns of consumption are also changing.
“Today volumes are still mainly VSOP and above, however a slowing down on the older qualities, that is XO and above, is noticeable.
“This is a result of shifting trends in China where the most prestigious Cognacs are facing the new government’s anti luxury/corruption policy. There is also a growing middle class in China who are looking for accessible yet status products and VS would certainly fit into this category.”
Currently it appears that the VS quality is largely consumed in the regions where there is not much ‘foreign alcohol’ available, so Cognac competes against local alcohols such as Baijiu. “It is also interesting to see in Asia that consumption trends are going towards younger people, 25 to 35-year-olds, and also little by little towards a more feminine audience,” says Le Grelle.
Happily for Hine the company foresaw these problems arising in China and has accordingly adopted ‘a balanced strategy’ around the world, and for the past three years has not solely concentrated on Asia. Rightfully renowned for its vintages, Hine’s top export markets are, aside from China, Russia, the US, UK and France – and it’s Russia which is showing the best growth.
“Thanks to the work done with our importer, we have succeeded in positioning Hine among the top Cognac brands in Russia,” says Le Grelle. “It is a market that is particularly interesting as it is mature and consumers are educated connoisseurs who are looking for exclusive, artisanal and high-quality products rather than global brands.”