News Comment: Hine Under the Hammer

A Cognac brand rarely comes to market, so the news that Hine is under the hammer has had commentators chattering over potential suitors. Hamish Smith looks at the possible runners and riders.

Hine is one of, if not the biggest Cognac outside of the big four of Hennessy, Martell, Rémy Martin and Courvoisier, so its availability will have a good few industry cheque books twitching. But a brand of such reputation and rarity will come with a significant price tag – one that precludes all but larger drinks groups from putting pen to paper. 

Over at Euromonitor International, senior drinks analyst Jeremy Cunnington has been sizing up the suitors. “There will certainly be a great deal of interest in Hine,” he says, “either from companies already in the field as they look to enhance production capacity or companies looking to enhance their portfolio spread.”

Hine is not only an available Cognac, of which there are very few about, but its vintage-bent also gives it a cache and point of difference. Its stable comprises: Hine Rare VSOP, Hine Antique XO, Hine Jarnac-matured Vintage Cognacs and Hine Early-Landed Vintage Cognacs.

Combined, these factors should drive a high price, but Hine’s owner, CL World Brands’, financial troubles (its parent CL Financial was bailed out by the Trinidad & Tobago government in 2009) and its subsequent eagerness to let go of Appleton to Gruppo Campari and Burn Stewart Distillers to Distell just last month, sends a signal that this is a buyer’s, not a seller’s, market.

CL World Brands’ trump card is the hope the Hine will attract a bevy of interest. Perhaps the House of Hine’s inventory – of which not much is known – will be the deal-breaker or maker. 

It will certainly decide the price, which in turn will decide who can afford the brand. 

The first name on the list of groups that can afford such a figure has to be Diageo, but Drinks International understands it is uniniterested. The group continues to court LVMH for the majority share of category leader Hennessey – so far unsuccessfully – but even with its current 34% share, Diageo has 1.7 million 9-litre case of Cognac sales (all volume data from Millionaires’ Club 2013). That’s only 300,000 cases short of Pernod Ricard’s Martell, about on a par with Rémy Cointreau’s Rémy Martin (1.65 million cases back in 2010) and well ahead of Beam’s Courvoisier (1.4 million cases). Perhaps most saliently, its part-share in Hennessy is much bigger than the whole of Hine. Not a bad state of affairs for a drinks group that is supposedly in need of a Cognac.  

Pernod Ricard can be probably be struck off the list of suitors. Its freewheeling Martell (up 23% in value, 8% in volume fro H1 2012/2013) led it to move for a reserve Cognac source in the form of Le Maine au Bois SAS in February, so Hine has come up for sale a little too late, or perhaps early, depending on how you view it. Behind the scenes Pernod is also making a push behind its Armagnac Marquis de Montesquiou in China, positioning the Gascon brandy at a premium to Cognac.