The category’s second largest market is the Philippines, where 21% of the world’s brandy is dispatched. It is growing at 7%, but mostly because it is home to brandy’s skyscraper brand. Looking down from the clouds is Emperador, the Philippine brandy that has swept its domestic market with unparalleled impact. For more in-depth analysis of the market and the category’s biggest brand see page 9.

These two giant markets are strong and propelling the category forward but they are local markets that operate in almost isolation. Euromonitor International’s Jeremy Cunnington agrees. “More than any other major international category, local conditions affect brand performances. In the short term, the strong growth in its two core markets will sustain the category. However, producers need to do more to revive the category in key markets. With a lack of global brands and major support from global players it is unlikely,” he says. 

Russia is the third-largest market by volume and value. As Richard Woodard discusses on page 21, it is a mixed bag of ex-Soviet state brandy and cognac and is forecast to see a 19% growth in volumes (table B) and a 27% rise in value (table C). Cunnington sees Russia – and to a lesser degree Poland – contributing to brandy’s growth in the future “due to the popularity of brown spirits and a move away from the more traditional vodka”. 

The US is the only other top 10 market expected to grow (by 8%) by 2018, according to Euromonitor International. For better or for worse, brandy is in growth in its large markets, but is in negative growth in most others.

Down-traders

Traditional brandy markets are in historical decline – in Germany, Spain, South Africa and Brazil, steep decline. German player Borco reports brandy consumption is 90% off-trade and is dominated by private-label German brandy under €10. Cunnington assesses: “Germany, the world’s fifth biggest market in 2013, suffers from an old-fashioned image, with younger consumers viewing brandy as something older generations drink and thus not cool. They are turning to more international spirits categories, especially whiskies (bourbon/other US whiskeys and Irish) as well as dark rum.

“This switch by younger consumers can also be seen in other markets, particularly the emerging ones of South Africa and Brazil. The former is expected to see volume sales fall by more than 50% between 2008-2018 from 5.2 million cases to 2.5 million. As with Germany, this is due to consumers switching to more modern and fashionable products, such as whisky and vodka in South Africa and vodka and tequila in Brazil.”  

“However, in some markets brandy’s decline is not entirely to do with changing consumer tastes, but also changing priorities for the producers. This can be clearly seen in China where the dominant producer, Yantai Changyu Group (84% volume share in 2013) has decided to focus its resources on wine rather than brandy, leading to an expected 7% CAGR (1.4m case) between 2013-2018.”