Cognac Market Foreseen to Grow Exponentially by 2027

Published: Thu Sep 05 2019

For the past few centuries, Cognac has gained universal recognition as one of the finest spirits which are distilled from grapes. Qualities of cognac in terms of intensity, warmth, and subtlety, remain incomparable, which have strengthened its identity as a ‘symbol of the elite’. Cognac was named after the town of Cognac in France and eventually, this brandy type started evolving, adapting to the modern tastes and appealing to newer demographics. Similar to the case of champagne, cognac continues to be protected by law and remains subjected to strict production criteria.

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Consumption of cognac isn’t limited to the provinces of France, rather America, Europe, and Asia have emerged to be three of the most lucrative markets for cognac over the course of time. The concept of cognac is certainly not new for consumers in the aforementioned regions, but the recent surge in demand for premium liquor experiences has upended the scenario and brought in new avenues for the cognac industry in terms of value as well as volume growth. However, it would be interesting to see how the prominent brands active in cognac space will continue to innovate and lighten the way for new entrants to boost their market standing.

North America stands firm as the leading market for cognac and is estimated to see impressive growth in the next 10 years. According to the recent studies, the US topped the list of the 10 leading cognac export markets in 2018 and demonstrated nearly 5% rise in volume terms, to 86.5 million bottles. Export volumes of the US were equal to the combined volume of other nine countries featured in the list, namely Singapore, China, the UK, Germany, France, Latvia, Hong Kong, South Africa, and the Netherlands.

Historically, the Black Americans were among the first ones who were introduced to the spirit and, hence, accounted for a significant proportion of the purchasers. However, in the recent past, concerted efforts of influential advertising by the cognac brands have evoked a wave of interest among the white consumers in North America. In addition to that, the patterns of cognac consumption in the chief regions of North America, in the US and Canada, remain largely influenced by cultural considerations and economic sentiments of the consumers across these regions. Occasions wherein cognac varieties are being served and savored are also changing considerably. From being a traditional digestif and a casual drink at special occasions, it appears that cognac varieties are successfully making their way into regular drink cabinets of the North American consumers.

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The demand for premium liquor continues to be on a tear, for the fact that premium alcohol varieties are not only infused with high-quality ingredients but also subjected to exhaustive distillation processes. Premium liquors are well popular for their fine-tuned viscosity & texture, which is a key reason they are perceived as investments worth the spending. This massive skew toward premium liquor is likely to give tailwinds to the sales of cognac in the coming years, with VS (very special) and VSOP (very superior old pale) being two of the ‘in-demand’ varieties. In addition, consumer interest in ‘experiential drinking’ is also a key reason boosting consumption of cognac, on the grounds that the new-age consumers value experiences over products.

Apart from the trend of premium drinking that has long been the core strengthener of cognac market revenues, budding appetite for brandy-based cocktails has benefited cognac sales by a wide margin. An increasing number of foodservice chains are promoting their redecorated menus with addition of new brandy-based cocktails, which is a part of their strategy to boost in-store footfall. Cognac, by far, remains one of the top-most choices for preparation of brandy-infused cocktails, given that cognac offers a window of opportunities for the foodservice operators in terms of flavor and aesthetic experiments.

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