All the major cognac players saw double digit growth in sales to the Chinese market in 2010, overtaking whisky for the first time since 2004.
A report just out by the IWSR showed that 1.9 million cases of cognac were sold to China last year, an increase of 17.5 per cent. Whisky, on the other hand, grew by only 2.8 per cent.
Most of the whisky sold in China is by mid-sized companies, and it’s been favoured by the Chinese since 2004.
However, these medium sized producers simply don’t have the clout to sustain the meteoric rises they’ve enjoyed over the past few years. This is because most of the market is supplied by contractual outlets – and these contracts are becoming more and more costly. Because of this, companies such as Bacardi and Brown-Foreman have actually cut their Chinese investments, so lowering their exports. The only two whiskies that continue to forge forward are Johnny Walker (Diageo) and Chivas Regal (Pernod Ricard).
Because the cognac suppliers began investing in China much earlier than those of other spirits, they’re now reaping the rewards.
Indeed, cognac really is flying high with all levels and age of consumers. However, it’s thought that because many of the younger Chinese drink their spirits mixed – perhaps with green tea, soda or fruit juice, that they wouldn’t actually know the difference between whisky or cognac in their drinks. But what they do relate to is the names of the brands – proving that the cognac advertisings strategies are working. Different brands equal a different status – something that is very important in China.
This is the reason that cognac is the drink of choice right now. The leading brand is Hennessy, but Martell is closing the gap along with Remy Martin.