IT’S SAID THE STRENGTH OF THE DRINKS INDUSTRY, ABOVE OTHERS, LIES IN PEOPLES’ HABIT OF DRINKING IN GOOD TIMES AS WELL AS IN BAD. That is indeed true, but they spend more in the good times. That’s where the US is right now – GDP growth is at the highest it’s been in 10 years (5%) and unemployment the lowest (5.6% of the workforce) since before the wider world had heard of Fannie Mae and Freddie Mac. Simply put, the world’s number one superpower has renewed its faith in consumerism.
’s said the strength of the drinks industry, above others, lies in peoples’ habit of drinking in good times as well as in bad. That is indeed true, but they spend more in the good times. That’s where the US is right now – GDP growth is at the highest it’s been in 10 years (5%) and unemployment the lowest (5.6% of the workforce) since before the wider world had heard of Fannie Mae and Freddie Mac. Simply put, the world’s number one superpower has renewed its faith in consumerism.
The brandy market is forecast to expand healthily in the coming years. Euromonitor International predicts 8% from 2013-2018, compared to the downturn years (2008-2013) when growth inched forward only 1%. Here consumers are expected to upgrade the quality of their cognac, buy that extra quart of E&J, or even try a new flavour edition, but whichever way, brandy’s fourth-largest volume market (11m 9-litre cases) and second-largest value market is looking positive for producers, inside or outside of the country.
The US is unusual as it has large-scale brandy producers – such as Gallo’s E&J 4 million case brand (the last time they told us in 2013), Constellation’s Paul Masson Grande Amber (1.3m cases in 2013) and Heaven Hill’s Christian Brothers (1.1m cases in 2013) – but still imports more than half what it produces.
Move over Britain – it seems cognac has the special relationship with America. The latest figures from the BNIC confirm this and, further, that Americans are drinking even more cognac than last year. It was up 12.2% in volume and 7.9% in value in 2014. The US is the largest single cognac market and if it wasn’t for a return to growth here, accountants from Cognac might be twitching further. Even with the market’s stabilising effect, global volumes slid 3.6% and value fell 11%.
The big player here is Hennessy, which dominates the sizeable VS market and is established as a status spirit among African Americans. Courvoisier, too, counts the US as its top market, thanks to the volumes of its VS. Somewhere in the region of three-quarters of cognac in the US is at entry level (compared to less than a fifth in China). This used to be a point of criticism. No longer. In fact, those houses that offer entry-level cognac in the US have weathered the crisis in China with far less erosion to their turnover.