Brandy Report (10/12): Brandy in the US

24 March, 2015

Rebecca Asseline, global brand ambassador for Courvoisier, says the house is “committed to the VS market” but suggests the long-term plan is premiumisation in the US. “Some houses have struggled with not having good stocks of old eau de vie [post the Chinese boom] but we have good reserves,” she says.

Cognac houses will continue to want to build value from VS upwards. Indeed, Rémy Martin is phasing VS out of the market altogether, but French producers will do well to remember this humble grade has kept their industry’s books looking respectable in the past couple of years.  

American brandy had a mixed recession. While some consumers might have been forced to drink less, and others joined from more expensive categories, there is little evidence to show consumers have dropped down in meaningful numbers from cognac. The 2013 stats from the Distilled Spirits Council of the US, show most brandy volume falls under the value segment, followed by high-end premium and super-premium, while the middle tier amounts to only 3%. 

According to Constellation, domestic brandy volumes see-sawed over 2009-2013, but the past couple of years have seen positive growth, albeit 0.7% and 1.4%. The company’s regional director, Europe, Martin Van’t Zelfde tells DI the “trend should be accelerated in 2014, mostly thanks to the success of Paul Masson Grande Amber Brandy”. 

The Californian brandy, which comes in VS, VSOP and Peach flavour, down-traded from 2010-2012, then spiked 3.9% in 2013. According to Van’t Zelfde, the brand is now growing in double digits, thanks to the Peach flavour, which has solidified its position as the number two-selling American brandy in the US.

Market leader E&J has yet to climb aboard the flavoured bandwagon, but number three player Christian Brothers has followed suit, Heaven Hill adding a Peach flavour.  

Heaven Hill’s MaryCrae Guild, associate brand manager says the brand is “capitalising on the flavour trend” and new consumers recruited by flavour innovations “are expected to stay loyal to the brand family”. About 70% of the brand’s output remains the VS, so the company hopes flavours are finding new business, not cannibalising old. 

It’s tempting to assume US brandies and cognac compete for market share, but in reality the overlap is minimal. Far from seeing cognac’s advances as competitive, US producers see it as leading the way. Van’t Zelfde says cognac’s return to form “is positive as it creates a halo effect in the brandy category”. 

So local brandy isn’t closing the gap on cognac in the US. But that’s because producers aren’t chasing. There is a chasm between Hennessy VS at $25 and Christian Brothers at $12 – a rather attractive one at that, inhabited by around 6-7m cases of brandy. US producers aren’t distracted by dreams of grandeur. Premiumisation isn’t their growth vehicle right now, it’s flavours.

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