Coping with the difficult Cognac market in France: Risk or opportunity?
The French Cognac market isn’t that well at all. Only 4 million bottles of Cognac are actually sold in the motherland. The major question for the BNIC (Bureau National Interprofessionel de Cognac) is: How can we make Cognac more attractive for French consumers?
One step was already to push cocktails based on Cognac, such as the Internationl Cognac Summit – or the Semaine Du Cognac (Cognac week), which began yesterday. But what about the offer? There are two Cognac shops in France, one in Cognac (Cognatheque) and one in La Rochelle (Cognac Only). Soon there will be a second Cognac Only shop in Bordeaux, competing with the great wines of the Bordelais.
If you have a look at supermarkets or shops, you’ll find perhaps a maximum of 4-6 Cognac bottles, of course in the region of Charente that’s different. So the rumour has it, that the BNIC wants to organize and join forces to open a sort of embassy for the famous eaux-de-vie in highly touristic Paris.
I am told, and already experienced it myself, that this will attract tourists – Russians for example, or Chinese probably. But creating the offer in the French capital – will that help to push Cognac sales on the national market? I do not think so. Even when Paris is somehow France, as it is such a centralized country.
Cognac cocktails seem to be the only way to reach young customers today – but let’s not forget that Cognac has its price. So why buy a 30 € VS if you can get a vodka bottle and mix it with Sprite or Coke – for 8 – 12 €. Come on! And the average price of cognac in France went up by 30% recently, in the middle of a crisis.
There is a major problem with that strategy: Whisky is more popular in France, and cheaper. Cognac still has the image of a rather “old” drink for aristocrat people. So if you say now, hey people, mix it (like in the US, but it’s a whole different situation over there, because the Afro Americans differ themselves in a way from Whiskey-drinking Americans), why should they choose Cognac.
And there is also a problem with the actual producers: The big cognac producers such as Hennessy, Martell, Courvoisier and Remy Martin consider France as a weak, declining market – so they prefer to invest into new emerging markets in Asia or the US. The small producers are simply too small and they are dominated by the bigger maison de negoces.
What Cognac needs is a major lifestyle campaign
So the rumor has it that the BNIC wants to invest into a cognac house and a flagship store in Paris. The so called “maison du cognac” would be then a communication instrument. The idea seems to become more and more popular. The Cognac lobby imagines a place where only Cognac is offered, no Whisky or other spirits. Whisky already has its “embassy” in Paris’ 8th arrondissement. And yes, this year’s Whisky Live Paris 2010 at the Palais de Tokyo will also have Cognac tastings, but is there really a broad Parisien target group that is interested in Cognac?
A special commission of the BNIC works on the “Paris project” already, for both “Cognac house” (communicating the culture, spreading the background etc.) and flagship store for actually selling bottles.
Good idea. Really? Because this activity would mean a serious investment and this idea comes from an institution which already has quite some financial problems: The BNIC has a deficit of roughly 600 000 €, they spent 11 million € last year, with a revenue of 10,4 million €.
Also there is a political issue: Why would the big Cognac houses support the BNIC in this activity? Why should they? To sell some more bottles in France and to help small and middle sized Cognac producers to distribute some of their eaux-de-vie in Paris? Do people really think Hennessy wants to invest into a “cognac house” where their bottles stand right next to Rastignac »”>Rastignac Cognac? And that people perhaps could realize that they like the Rastignac XO more than the Hennessy XO?
All this is complicated. It seems somehow clear that a flagship and an ambassy in Paris would probably a good idea for the Cognac market in France but that’s not the key. What the French market needs is a contemporary, fitting campaing to position Cognac as a drink which people can afford, understand its value and accept both neat and mixed.
The ultimate question actually was: Is there a way to make Cognac more attractive and is communication the key? Perhaps it’s not possible and if, only with a huge marketing budget.