21 December, 2012

Château de Cognac president Laurent Diter says: “It’s a totally different perspective to Baron Otard, which bottled a 1972 vintage earlier this year. D’Ussé was launched in the US in June and is targeting African-Americans. Apart from anything else, the bottle is nothing like that of Otard, featuring a prominent cross of Lorraine.”

Also on the less than traditional side of the Cognac coin is ABK6 Ice Cognac, introduced into the UK this summer by the house of ABK6, which, as its name suggests, is one of the newer and less conventional Cognac producers. Ice Cognac is a young VS (aged for two to four years) variant, intended to be drunk on the rocks, and complete with a white, ice-effect bottle.

Cognac sales in the US during 2011/12 rose by a modest 2%, and the bulk of cognac consumed in the States is of VS status, which reduces values, though in terms of volume the US is the world’s leading cognac market, with sales of 49.3 million bottles during 2011/12.

Exploiting travel retail

While the cognac industry has been slower than scotch whisky producers when it comes to exploiting the travel retail sector with exclusive offerings, there is a growing momentum for such bottlings, and this summer heavyweight brand Martell – owned by Pernod Ricard – launched its Martell Millésime 1968 Cognac through travel retail outlets in the Far East.

A Grande Champagne, single vintage bottling, Millésime 1968 is packaged in the sort of opulent wood and leather style, complete with individual bottle number, associated with the sector. It has been aged for more than 40 years in Martell’s oldest cellar – the Chais de la Coquille.

Given the impressive rate of volume and value growth in Asia and even the comparatively small rises in the US, leading to an overall 2011/12 year-on-year volume increase of 4.3%, there are understandable concerns about the cognac industry’s ability to service future demand without compromising quality.

Strict requirements

Unlike scotch whisky, which can source malting barley from anywhere in the world it chooses and may distil 24 hours a day and 365 days a year if it wishes to, cognac production is limited by strict legal requirements intended to preserve the product’s quality and relative exclusivity.

For example, only grapes grown in the designated Cognac region may be distilled into cognac, and the French government stipulates the amount of ground that may be planted with vines for this purpose – 72ha in 2011. Secondly, the distilling season is limited to a period from when the grape harvest ends (October) to March 31 the following year, and the capacity of the pot stills in which the second of the two distillations takes place may be no greater than 25hl.

Courvoisier’s Sernovick admits that “Supply may become an issue – can we supply enough cognac? Asia is the major market for VSOP [aged for a minimum of four years] and above, but we’re not forgetting the other markets. We are doing as much as we can to increase supply, but it’s not possible to expand much more. For one thing, the amount of cognac that can be made each year is dependent on the climate for the grape harvest.

“Overall I really hope you won’t see a reduction in quality of cognacs, and you can’t fool a cognac consumer for long. From our point of view, we would always prefer to allocate stocks rather than compromise quality in any way.”

When it comes to protecting the integrity of the product, and in particular the older cognacs that produce so much revenue in Asia, David Boileau, cognac ambassador for the trade body BNIC, notes that: “From 2018, the XO category will increase from a minimum age of six to 10 years. With high demand for cognac some producers might be tempted to opt for the bottom end of the age range, though at present nobody is maturing it for less than 10 years, anyway.”

He adds: “It is difficult for the people of the region to plan 10/20 years ahead and always difficult to get it right.”

It is true that the cognac industry has known hard times in the not-too-distant past, and one source declares: “People are well aware that there might not be continued growth in demand for cognac. There is optimism tinged with caution.”

However, given that Diageo is about to invest more than £1 billion in a second ‘super-distillery’ for scotch and in increasing capacity at many existing plants, with yet another vast new distillery also being mooted, maybe it is time for the regulators of cognac – with an annual turnover now worth more than E2.2 billion – to accept that the good times may be here for several decades to come, and act accordingly.

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