There’s always been a problem with booms in any business, and that’s that at some point it’s pre-ordained that the pendulum will begin to swing in the opposite direction.

And with sales in China having risen by virtually unprecedented levels over the last few years, it should come as no surprise that experts are now predicting that this explosive growth is going to slow.  In fact, it already has, with the expansion of what is now the world’s second largest economy slowing to 7.7 per cent in the first quarter of the year.

china-market-martell

However, this is still not a growth to be sniffed at, and whilst forecasters have now cut their predictions, they still reckon that the growth outlook for the year will be around a very healthy 8 per cent.

So what does this mean for the cognac industry?  And how do the producers intend to continue to nurture one of the largest portions of their market?

Well, when it comes to one of the largest players in the market, Pernod Ricard (Martell Cognac), then the plan is to expand, expand, expand…  Despite high end spirits being one of the biggest casualties in the country, thanks to moves by the Chinese government to curtail the common practice of giving such items as gifts and government sponsored banquets, the owner of Martell Cognac sees this as an ‘opportunity’ rather than a challenge.

Pernod Ricard’s Managing Director for China, Con Constandis, says that “The goal is to boost our profile as an ultra-prestige player.”  He says that whilst the Chinese government is making concerted efforts to prevent what it perceives as extravagance, it’s somewhat like scolding teenagers at a party.  “They’ll settle down for a while by you’re not going to stop them.”

This means that “Pernod will continue to focus on high-wealth and other affluent individuals.”

Part of Pernod Ricard’s expansion plans include the opening of members-only clubs, as well as hosting intimate gatherings of less than 10 VIP guests to attract more drinkers of its high end products that include such cognacs as L’Or de Jean Martell.

L'or de Jean Martell

And despite the slowdown of sales of spirits such as Chinese baijiu (down 30 per cent), Pernod hopes to increase its own share of the premium spirit market in the country from 35 per cent last year, to 40 per cent by 2015.

Click here to discover more about Martell Cognac.

Sources:  scmp.com, online.wsj.com

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Jacki has been with Cognac Expert from virtually the beginning. She's the senior editor of the blog, and has spent much of her life living in rural France. Today she's based back in the UK, where she splits her working life between writing for Cognac Expert and working as a Paramedic at a large regional hospital.

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