Brandy, and especially South African Brandy, does not get the credit it deserves. South African brandy cannot be compared to any European brandies, says KWV marketing director for spirits & RTDs Peadar Hegarty, emphatically. And there lies the problem with brandy in general.

Brandy is very much about regional and national brands, unlike Cognac and Armagnac which are more brand oriented and more international. Cognac, in particular, stands for luxury, whereas brandy is more about regional tastes and traditions, not forgetting price.

According to Drinks International’s Millionaires survey, the largest brandy by volume is the Alliance Global Group’s Emperador from The Philippines. At the time of going to press, finding out anything up to date about Emperador was impossible due to the devastation caused by Hurricane Haiyan. 

Emperador was launched in the 1980s into a domestic market dominated by rum and gin. A strong economy and exports to Thailand and China resulted in sales tripling to 31 million cases between 2010 and 2012.

After Emperador comes United Spirits’ McDowell’s No 1 (10.9m cases). The McDowell’s No 1 brand began with the launch of McDowell’s No 1 Brandy in 1963-64, the company having been bought by United Breweries Group in 1951. McDowell’s first distillery was established in 1959 and it began bottling Bisquit brandy and Dorville French brandy from imported concentrates. 

The company commissioned India’s first distillation plant to produce extra neutral alcohol (ENA), with French collaboration, in 1961. 

McDowell’s launched McDowell’s No 1 Brandy, following the termination of the import contract for Bisquit Brandy. The brand created the template for the many ‘No 1’ brands that the company would launch later. More recently United, now run by Diageo, introduced McDowell’s VSOP, which has become a 3 million case brand.

Estelle Sauvage, export brands manager of Bardinet, which claims to be the largest French brandy producer, says the brandy market is a 200 million 9-litre cases sector with steady growth (51% in four years). But, she warns, this growth depends on the brandy’s origins. 

Regarding French brandy she says the category is doing well with, in 2012, 3.7 million cases and growth of 2.5% (2.8% between 2011 and 2012). So, it is growing but not so much as previously.

She says: “French brandy is not trendy any more because of the taste. Consumers prefer spirits which are easier to drink and, because of the consumption moment, after-dinner drinks are not as popular as before. Thus consumers are older and older. But in the Middle East [Indian labour force] and India, for example, consumption is growing.”

After the ‘flagship’ French brandies – Cognac, Armagnac and calvados et al – one looks to South Africa and Spain, specifically Jerez, as major brandy producers and consumers.

Distell’s business director, spirits, Dr Caroline Snyman, confirms: “The international brandy market is very regionalised, where specific styles are known, liked and entrenched. In South Africa, for example, the emphasis is on exuberant fruit on the nose and the palate, and very smooth, soft textures.”

Hegarty says: “According to South African legislation we must mature the brandy for a minimum of three years, which is tightly regulated. When the age is stated on the bottle – for instance five, 10 and 20 years – the youngest component must be of that age. Also, all brandy must be distilled in copper pot stills. That is not the case with all American and European brandies. Further we have a maximum cask size for maturation of 340 litres.

“Brandy in the South African market is in decline mainly due to the growing popularity of whisky and white spirits. Whisky and vodka have created an aspirational appeal for the South African consumer. Having said that, brandy has only itself to blame for not delivering on these consumer trends,” says Hegarty.

Snyman agrees that while the mainstream South African market has shown short-term volume decline, there is growth among the high-end prestige brands. She believes there is a new appetite for luxury brandies driven by several factors, including affluent South Africans wanting to support South African products.

Hegarty says: “Internationally, brandy is deemed not as prestigious a category as Cognac. Consumers are surprised that intrinsically our brandies are the same as and at times better than Cognac. Witness our KWV 15 being awarded Best Brandy in the World in 2013 (ISC) judged against the top Cognacs.”

Snyman says: “With three styles of brandy made in South Africa – pot still, vintage and blended – it is such a versatile spirit. Traditionally, with brandy being South Africa’s favourite spirit, most production was taken up by the local market and there was little impetus to export. 

“Now, with the growing affluence across Africa, that is changing and there is growing demand for South African brandies beyond our borders,” she says. Spain is the other significant producer of ‘other brandies.’ Torres is Spain’s best known wine producer and it also makes brandies. 

General manager Miguel Torres Maczassek tells DI: “My family has distilled brandies since 1928. Our portfolio consists of Torres 5, Torres 10 (best seller), Torres 15 (launched this November in México), Torres 20 – twice decorated as Best Brandy of the World.” 

He continues: “In Spain the brandy category has suffered a significant decline in the past years due to changes in consumption habits, a more restrictive legal environment and, of course, a very negative economic situation. Given these complicated circumstances, we are happy that Torres brandy is maintaining its volumes,” he says.

“Internationally, we see the brandy category growing. In Europe for example, where the economic downturn has affected several countries, brandy has come forward as an affordable alternative to Cognac. 

“In emerging countries the ‘imported brandy’ category is growing because it is a way to demonstrate family economic improvement. But in this segment we also see intense competition with categories such as whisky and vodka. For us the Mexican market is key and where our brand continues to be strong,” says Torres Maczassek.

González Byass international sales director Nicolás Bertino says: “Brandy is the fourth most important alcoholic beverage consumed in Spain, making up 11.4% of the total national consumption.”

Tremendous growth

GB’s key brandy brands are Soberano, Byass and Lepanto and he claims “tremendous growth” in international markets. For Soberano, total volume has seen an 8% increase in international markets and value is up 13%, says Bertino. “In the past 12 months we have seen double-digit growth in Slovakia, Lithuania and Russia. Lepanto has seen great performance in a number of markets in that year with volume and value grown also in double digits in Germany, US, Lithuania, UK, Slovakia and Canada. 

“Mexico is a very important market for us and brandy has been in the Mexican market for decades, forming part of our history given the strong Spanish links with the country. In 2003 the total consumption of brandy was at 5 million cases and today has dropped to 3 million cases,” he says.

Bertino sums up brandy’s typical consumer and usage: “Generally, the consumer tends to have the same profile in most international markets – male, 40-plus with high income, although in some Nordic countries and in the UK anecdotally, women are beginning to consume more.

“Generally brandy is drunk in the traditional way, however in some markets it is served over ice – most notably in Scandinavian markets. In Mexico it is mixed with cola or ginger ale but not used in cocktails as yet. There is some evidence that brandy is being used more in cocktails in the markets where cocktails are popular, such as the States and the UK,” he says.

“We are combating the traditional service methods of brandy by looking for food and wine-matching opportunities and we have seen great acceptance in Spain and Mexico when matching top-end brandies, such as Lepanto, with chocolate, with cigars and where we have broken new ground is matching Lepanto with cheese,” says Bertino.

Pernod Ricard recently launched premium Solera Reserva Spanish brandy Domecq 1820 to “refresh and draw new consumers to the category”.

The company values the total brandy category at around £190 million and says it is dominated by French brands. These are showing a value decline, while Pernod research shows that non-French brandies are showing a value growth of 14%.

Domecq 1820 is produced and aged for two years in American oak in Malaga. It is targeted at older men aged 50-plus. 

“Recent research among our 50 to 67-year-old ABC1 target consumers shows they are ready to welcome a new brandy from Spain, merging tradition and expertise with modern cues,” says Vicky Wood, Pernod Ricard UK’s marketing head.

Returning to French brandy, Sauvage says Bardinet “will present an innovation in January, developed with the expertise of our cellarmaster, Bénédicte Bertet, and aged in our own cellars near Bordeaux, which will highlight the quality and the potential of this category.”

Oliver Dickson, senior brand manager at William Grant’s UK distributor, First Drinks, looks after the Three Barrels, the number one French brandy brand in the UK.

He says: “The total brandy category in the on-trade is currently in growth, up 11.6%, and Three Barrels is growing at 1.5% (CGA, total UK trade). In the off-trade, brandy is not performing as well but remains in growth, up 0.7%.

“Although typically seen as a ‘wind-down drink’, brandy is consumed on a wider number of occasions than whisky and we’re seeing experimentation in the on-trade as more contemporary offers such as the French Mojito join classic brandy cocktails such as Sidecar and Brandy Alexander,” says Dickson.

In summary, KWV’s Hegarty says: “The challenge for the brandy sector is to shed its tired image and become relevant and interesting again for today’s consumer.  That means it must present itself as a credible alternative to other mainstream spirits. The intrinsics of quality brandy such as the KWV range give it a decisive advantage in this regard.”

Torres Maczassek says: “The brandy category has been traditionally seen as a local category, so the most important challenge and also opportunity is to become a relevant category within imported spirits. In Asia we already see an interesting development where brandy can co-exist together with Cognac.”

Sauvage agrees: “There is a lack of novelty and innovation within the French brandy category, which suffers from the competition of other spirits and even of other brandies.” Brandy is such a diverse category, it is difficult to generalise but brands need to work hard to establish their quality credentials. Otherwise, they will remain local, national and possibly cheap.