Brandy’s Dandy

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Think brandy or cognac, and you may envision holding a snifter by the fire or a glass of eggnog at a holiday party. Just the spirit for the upcoming season. But brandy isn’t a hit just at the holidays anymore. While brandy volume spikes during the winter months, year-round sales are steadily growing.

Total brandy and cognac sales were up 5.9% last year to nearly 8.7 million 9-liter cases, according to the Adams Liquor Handbook 2001. Cognac alone grew at an even faster pace, but sales at nearly all price levels are growing. Category performance also has been steady for several years, putting it in an enviable position, especially among brown goods producers.

A number of trends have driven brandy’s success in recent years. Traditional brandy drinkers — think residents of the three largest brandy markets, Wisconsin, Minnesota and northern Michigan — stick with what they know. The urban culture of African-American and Hispanic consumers is moving to the suburbs, along with beverage preferences. Younger adult consumers are turning on to the sophistication these products offer. And, as with many other categories, consumers are trading up.

All these trends are leading not only to category growth, but a plethora of new products aimed at capturing more of these diverse consumers.

Sticking With Tradition

The holiday season already upon us is a great time to merchandise brandy and cognac. In addition to being perceived as a special gift, consumers associate brandy with relaxing at home with friends. And what better time to get together with friends than the holidays?

“Research says brandy consumers are very loyal; it’s their drink of choice year round,” said Susan Overton, marketing director at Heaven Hill Distilleries, which markets Christian Brothers. “But there’s definitely an upswing in the fall as others also drink more brandy. This is the season when people look forward to a glass of brandy by the fire.”

The big domestic brands continue to use the holidays as a springboard to build product awareness and strategy for the rest of the year. Christian Brothers, which grew 4.8% last year, is offering a cross-merchandising mail-in rebate in many markets, pairing brandy sales with savings on firelogs or eggnog.

The brand’s VSOP was repackaged last year in a clear bottle to better communicate the rich color and value of the product. Marketing efforts into next year will be directed to the trade. 6811COG02

Major focus next year will be placed on Christian Brothers Amber. Several consumer promotions are planned to help build the brand at retail and reinforce Christian Brothers’ quality image.

Paul Masson brandy is promoting a brandy “Martini” made with Amaretto and cherry juice this winter in addition to traditional holiday gift boxes. The brand grew 13% last year to more than a million cases. It’s ad campaign — the Paul Masson brandy moment — is all about being comfortable at home with friends and appears nationally in print media like Vibe, Esquire, Stuff, Golf, Savoy and GQ.

“Paul Masson is growing about twice as fast as the category, which is an enviable position to be in,” said Peggy Fox, director of marketing for Canandaigua Wines. “People are very positive about it. They’re drinking it straight and mixed, so it’s not just a male drink. And while we’re not ignoring women or ethnic groups, we’re aggressively going after the Caucasian audience of men 29 to 45.”

New this fall are 200 ml and 375 ml sizes of Paul Masson VSOP, which was introduced last year. The brand also has plans for a 50 ml package for VSOP and a 100 ml size for VS to drive impulse sales near the register.

Category leader E&J Brandy saw sales rise 8.4% last year to 2.2 million cases. The brand expects sales this year to surpass last year’s by about the ame margin. The brand has been appealing to new users by promoting the mixability of both its VS and VSOP to younger consumers. A partnership with Cadbury-Schweppes has helped demonstrate the brand’s versatility.

For the holidays, E&J is introducing premium-priced Single Vintage Brandy that is available in limited quantities. The seasonal product will be different every year. All the E&J brandies are supported with a comprehensive national merchandising program including a fireplace display, gift boxes and drink recipes.

The brand expects to follow up the holidays with a national cross-promotion at retail in the first quarter of next year.

The retro trend defined by the return of classic cars, clothes and cocktails also is having a positive impact on brandy sales. “As retro cocktails become more fashionable, brandy drinks are coming back, adding to category growth and discovery,” said Tim Laird, senior brand manager for Korbel Brandy.

Korbel Classic is upgrading its packaging and offering a holiday eggnog promotion with recipes and drink ideas this fall. The brand also has introduced Gold Reserve VSOP in test markets to bridge the gap between brandy and super-premium cognac.

“We’re trying to create some excitement in this category because it hasn’t gotten the same visibility as vodka, single malts or bourbon,” Laird said.

Capturing Urban Culture

“Cognac growth continues to rocket, outstripping almost every other spirit category but vodka,” said Larry Neuringer, category director for Remy Martin at Remy Amerique. “Urban culture continues to transition to pop culture. As that culture moves to the suburbs, cognac is getting new users who see it’s not your father’s drink in a snifter.”

Leading Brands of Brandy & Cognac

(Thousands of 9-Liter Cases)

Brand Origin Supplier
1999
2000
% Change

Brandy

E & J USA E & J Gallo Winery
2,030
2,200
8.4%
Christian Brothers USA Heaven Hill Distilleries
1,050
1,100
4.8%
Paul Masson Brandy USA Canandaigua Wine
918
1,037
13.0%
Korbel USA Brown-Forman Beverages
375
373
-0.5%
Raynal France Shaw Ross
225
228
1.3%
Presidente Mexico Allied Domecq Spirits, USA
236
224
-5.1%
Coronet Brandy USA Heaven Hill Distilleries
170
180
5.9%
Pedro Domecq (ex Presidente) Mexico Allied Domecq Spirits, USA
77
79
2.6%
Mr. Boston Brandy USA Barton Brands
81
76
-6.2%
J. Bavet USA Heaven Hill Distilleries
75
70
-6.7%
Total Leading Brandy
5,237
5,567
6.3%
Others
242
245
1.2%
Total Brandy
5,479
5,812
6.1%

Cognac

Hennessy France Schieffelin & Somerset
1,380
1,500
8.7%
Remy Martin France Remy Amerique
400
489
22.3%
Courvoisier France Allied Domecq Spirits, USA
440
450
2.3%
Martell France Seagram Americas
235
235
0.0%
Salignac France Allied Domecq Spirits, USA
60
68
13.3%
Total Leading Cognac
2,515
2,742
9.0%
Others
15
17
13.3%
Total Cognac
2,530
2,759
9.1%
Total Leading Brandy & Cognac
7,752
8,309
7.2%
Others
450
531
18.0%
Total Brandy & Cognac
8,202
8,840
7.8%

Source: Adams Liquor Handbook 2001

Remy is sticking to a strategic pricing strategy that positions its VSOP in a premium position. The brand has seen sales double in the past two years — sales were up 22.3% last year to 489,000 cases — pleasing retailers, according to Neuringer. Brand support also includes promotions and advertising, including one of the biggest radio spends in the category.

For the first time, Remy also is actively marketing its own VS. It renewed its focus on the product two years ago and recently revamped the packaging. The product has been rolling into AfricanAmerican test markets this fall.

Another product aimed at the urban hip-hop culture that has embraced brandy and cognac is Remy Red. A cognac and fruit juice blend, Red crosses over into the liqueur category, and offers even more mixability than traditional cognac.

Hennessey sales, too — up last year to nearly 1.4 million cases — have been driven largely by ethnic segments, particularly African-Americans. But its popularity is expanding among Hispanics and Asians as well, according to Elizabeth Sorota, vice president, group project director for Hennessey. 6811COG04

A new ad campaign bowing in February positions Hennessey as a premium brand for consumers who can differentiate one cognac brand from another. Media will include print, outdoor and spot radio. The brand also plans some exciting programs for both VS and VSOP next year.

Breaking With Tradition

Urban culture is becoming increasingly popular with younger consumers, and brandy and cognac are among many of the upscale beverages that appeal to these consumers.

“What resonates with young urban adults is what’s hot,” said Stephanie DeBartolomeo, marketing director for Courvoisier. “They’re embracing cognac. Our challenge is to position Courvoisier as hot, fashionable, breakthrough and cutting edge.”

To capture the essence of fashion, Courvoisier is doing unexpected things such as incorporating designer martini and highball glasses into its gift packs instead of snifters, along with party guides and drink ideas. Print and radio ads feature urban R&B and rap artists who make Courvoisier their own, as well as showing people having a good time with cocktails made with the brand. Courvoisier3

Young consumers are in many ways more sophisticated than previous generations. They’re well-traveled, informed and relatively affluent compared to their parents at the same age. They look for products that offer both quality and image and aren’t afraid to spend money on above-premium products.

“Younger consumers are turning on to brandy as a flavorful alternative to vodka and something a little more sophisticated,” said Overton. “Brandy also has a smooth flavor that is an easy drink to pick up and start consuming. It’s not so much an acquired taste as bourbon or single malt.”

Korbel is even launching a product designed especially for younger drinkers to help bring them into the category. Korbel XS (for “extra smooth”) is enhanced with vanilla, orange essence and spices. The result is an easy-drinking brandy that also mixes well with everything from fruit juice to energy drinks.

Trading Up

Young consumers aren’t the only ones looking for sophistication, however. The strong economy for most of the past decade led many consumers to trade up, and the brandy and cognac category benefitted as a result.

“A broader theme than the popularity of urban culture has been `populux,’ luxury for all,” said DeBartolomeo. “Cognac is something people can have that’s very aspirational, and a brand like Courvoisier fits the mold perfectly. It has a leg up on other spirits out there because it’s very authentic with a lot of heritage, but now it’s even more acceptable and approachable because it’s a sociable and mixable product.”

A lot of brands are capitalizing on the continued shift to ultrapremium brands. The more exotic and special a brand is perceived to be, the better in many cases.

“Cognac is like wine,” said Sorota. “The more you drink, the more you know and learn and the more you want to discover about the product. Consumers also want to differentiate themselves further by drinking something special.”

To that end Hennessey is introducing Hennessey Private Reserve, which will be priced and aged between Hennessey XO and Paradis. Paradis also is being relaunched with new packaging. Both products will get full trade and pr support.

Remy Martin, too, has seen its XO business grow significantly “due to market segmentation and new niches such as casinos, Asians, older consumers and Wall Street,” said Neuringer. The brand does a lot of hand-holding with these consumers through brand ambassadors, special events and public relations.

Courvoisier is pushing a 200-year-old cognac in high-end gift-giving guides to burnish its image among the cognoscenti. 6811COG05

Unusual brandies from other countries, including Spain, Mexico and Italy also are seeing an upsurge in business. Ethnic groups who consumed these brands in their homelands are slowly introducing them to their neighbors here.

Cardenal Mendoza, for example, one of few Spanish brandies still aged using the solera method, is building visibility and brand image in key markets here in the U.S.

“It’s a process of education, reminding people of the brand’s heritage,” said Ricardo Febres, marketing manager at Shaw-Ross International Importers. The brand is conducting a bartender recipe contest in four markets to generate new cocktail ideas. Off-premise, it has a strong tasting program in key markets.

What The Future Holds

While no one yet knows what effects the cooling economy or the September terrorist attacks will have on brandy and cognac sales, most marketers believed the category will weather the storms.

“There’s tremendous uncertainty right now, and no one is sure what the impact will be,” said Sorota, “but the total category is very strong.”

That very uneasiness, however, could be an unforseen boon to category sales.

“In times of uncertainty when the pace of change accelerates, people look for an island in the stream, a little place where they can get a break from cell phones and television news and look for something that comforts them,” said Neuringer.

Since a lot of brandy and cognac is consumed at home with friends or curled up in front of the fire, times like these could be made for the category.

Mike Sherer is a Seattle-based writer and consultant specializing in beverages and foodservice.


Brandy Primer

Brandy essentially is distilled wine. The word comes from the Dutch “brandewijn,” used to describe the “burnt” or boiled distilled wine 16th century Dutch traders brought back from Spain and southern France. Its origins date back to the 7th century when Arabs around the Mediterranean experimented with the alembic stills they invented to make perfume.

There are three basic types of brandy:

* Grape brandy — made from distilled fermented grape juice (wine).

* Pomace brandy — made from pressed grape pulp, skins and stems that are left after the grapes have been crushed to extract their juice for winemaking. Italian grappa and French marc are the two best known examples. Not surprisingly, they’re more raw and rough edged than traditional brandies. Some, however, are aged in seasoned casks to take the edge off, resulting in a very elegant product.

* Fruit brandy — made from fermented juice of other fruits. Examples include kir (cherries), Calvados (apple brandy from Normandy), poire (pear) and others. They’re often referred to generically as “eaux-de-vie” (waters of life).

Cognac is brandy made in the Cognac region of France, just north of Bordeaux. The region is divided into six growing areas. Like Champagne, brandy not made in the Cognac region cannot carry the Cognac appellation. Similarly, armagnac (an even older version of French brandy than cognac) is made in the Armagnac region.

There are no age statements on cognac, but many brandies from around the world have adopted some generally accepted terms developed to differentiate cognacs. These include:

* VS/VSP/Three Star. Very Superior or Very Superior Pale usually has been aged a minimum of two years in new oak casks. Most are aged four to five years.

* VSOP. Very Superior Old Pale must be aged for a minimum of four years. The industry average is 10 to 15 years.

* XO. Extra Old cognacs are at least six years old, but usually are 20 years or older. Most older cognacs are transferred to seasoned casks after a few years while they continue to mature. The oldest are stored in glass jugs to prevent them from taking on too much woodiness.

Many Spanish and Mexican brandies are aged using the solera system. Brandy is aged in a series of sherry casks. When brandy is drawn off from the the last cask, no more than a third of its volume is removed. That’s replaced with brandy from the next cask in line, and so on. The first cask in line is then filled with newly distilled product. The resulting blend may contain brandy that has aged for 30 years or more. The best Reservas are aged 12 to 15 years; Gran Reservas are aged from 17 to 20. Cardenal Mendoza recently introduced a product to commemorate its two hundreth anniversary that includes brandy from an original solera.

California brandies generally have a lighter flavor profile and cleaner palate than imported brandies, making them good mixers. Most are aged from 2 to 12 years.

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