Cognac: crisis? What crisis?

THERE’S NO GETTING AWAY FROM IT – cognac has taken a pasting in duty free over the past couple of years.


The double whammy of China’s crackdown on corruption and the collapse of the Russian ruble have taken the wind out of this important travel retail spirits category in the same jolting manner as a crunching Mike Tyson punch to the solar plexus.

I’ve also found sales statistics from Dubai Duty Free – the single largest duty free location in the world, and a vibrant crossroads between east and west – a reliable touchstone of the current fortunes of a specific brand or category. Sadly, the latest DDF figures for cognac make for depressing reading: sales plummeted 20% in volume and 19% in value in 2015.

Moreover, Saba Tahir, vice-president of purchasing at DDF, expects no recovery in the category’s fortunes until the end of the year and plans no new listings for 2016. The one thing she argues that might turn things around is a rethink by the houses on pricing, but she’s not holding her breath.

“We have noticed that consumer interest can be brought back into the category if it is re-priced between 25% and 30% from current retail price,” she says. “The demand can only increase with competitive prices or customers are expected to move to categories which offer stronger value for money, including armagnac, single malt whiskies, as well as brandy.”

Given the current climate you’d think cognac houses would be giving this month’s TFWA Asia/Pacific show in Singapore a wide berth, but not so. For instance, Deau Cognac is back for a second appearance after its debut there in 2015, launching a new-looking Extra Black cognac and Privilège Cuvée, a VSOP grade cognac that has been given an upgrade both in terms of the blend and the packaging.

“Last year was our first time exhibiting and we had such a good experience and received such positive feedback that returning was a given,” says Olivier Hidier, commercial director. “The region is full of opportunities, but remains challenging to break into and secure a strong foothold. Currently, China represents the biggest share of our Asian business, so the recent slowdown in Chinese spend has been tough, but we are optimistic this will return.

“Opening our Shandong province commercial office has enabled us to offer better service and support the market.”

Meanwhile, Cognac Prunier has decided 2016 is the time to make its first appearance at Singapore. The small, family-owned house has hired veteran duty free drinks executive Clive Carpenter to help develop a new exclusive range for travel retail based on vintage and age statements.

“Nobody needs another VSOP, XO or pretty decanter,” says Carpenter. “But age statements and vintages are, to a large extent, just about unknown in Cognac. I have kept in touch with the world of liquor and I’ve read lots of articles about the scotch whisky industry pulling back from age statements for supply reasons.

“We all know consumers like age statements, there’s something magic about having a bottle which says this is x years old versus something which has a certain colour label, say. Prunier is able to do it because it has fantastic stocks.”

As for the outlook in Asia duty free Carpenter is “not in the least bit pessimistic”. “I am particularly optimistic about the business particularly if you have something a little bit unusual. People are travelling more, and are used to having things. They are on the look out for something more unusual.

“It used to be they had to have what everyone else had. Now it’s: I don’t want to have what everyone else has.”