It appears that market analysts have identified a great opportunity awaiting any spirit producer who wants to fill a gap in the luxury Brandy market. Apparently there’s a huge ‘vacuum’ in the brandy market for super premium brands – the segment the analysts are referring to as the ‘bling’ sector.
Currently in the US, there are plenty of products in the so called ‘boring’ value brandy range (typical prices of around $12-$13 per bottle) and much fewer in the ‘super premium’, or ‘bling’ level (prices starting around $25). According to analysts, there’s a massive $1 billion dollar gap here that is just ripe to be plugged.
The thing is, the Cognac and Brandy market doesn’t act in the same way as other wines and spirits. Unlike whisky and wine, brandy is still a drink that confuses many. There’s a big difference between the person who’ll pick up a bottle of domestic Brandy and those who’ll choose a decent Cognac. And while the whisky, vodka, and wine producers already provide a great range in value, Cognac and Brandy are seen as two separate products, and therefore have two quite distinctly separate markets.
There’s a big difference between the typical purchaser of value brandy and those who choose Cognac. Although it seems a little crass to stereotype people, there’s strong evidence that the ‘value’ consumer is generally older, white and less affluent than those who put a bottle of super-premium Cognac in their shopping basket. Interestingly, in the US this segment is popular with the African-American consumer, and price growth here is outpacing the market. For example, you only need look at the figureheads of popular higher level Cognacs, such as Snoop Dogg and Landy, Ludacris and Conjure. And who can forget the hugely successful release of D’Usse, thanks to the partnership with mega-star, Jay Z!
But what this has done is to leave a gap in the area known as ‘premium’ – where bottles cost between $15-$25. And this, according to analysts, is the strongest part of the US spirits market.
Rabobank’s global wine and spirits analyst, Stephen Rannekleiv says, “There is an enormous gap between domestic, value brandy and super-premium Cognac. If Brandy had a normal pricing curve, we estimate there would be approximately 4 million cases of premium brandy sold, at a retail value of nearly $1 billion”.
Now, we know for sure that this is something that the big Cognac houses are not going to ignore. A $1 billion dollar market gap is something that they’re going to be very interested in. As indeed are domestic brandy producers. However, building a premium brand is not going to be easy – not to mention expensive.
So – any wannabee brandy makers out there think they’re up to the challenge? This could be your big chance. Create a luxury Brandy and tap into that $1 billion dollar vacuum. You’ll need to be quick though, because it appears that interested parties are already putting plans in place to tap into this lucrative sector. For example, Bourbon producer Chip Tate (former master distiller of Balcones) has announced that he wants to build a new distillery that will create a Texan Brandy. And there’s sure to be others quietly hatching strategies to grab their share of the market. Follow this closely, it’s going to be an interesting ride!
Sources: thespiritsbusiness.com, marketwatch.com