Brandy is one of the oldest spirits in the world and has its own tradition in almost all wine-growing regions. Cognac quickly made a name for itself as a noble spirit thanks to its fine terroirs such as Grande and Petite Champagne and the sophisticated ageing system. Brandy includes an exceptionally wide array of flavours and aromas such as fruits, herbs and flowers - but still has to adapt to changing conditions in its markets.
Cognac Hine guests are invited into the salon. The room in the 18th-century estate has certainly earned its name in every possible sense. Marble fireplace, panelled walls, polished mirrors, a couch suite in the middle. Cognac with tonic on ice is served. “A tradition of our house”, ensures the female PR officer. The sentence is left uncommented, yet it sums up the tensions which exist between tradition and consumption habits when it comes to Cognac. Despite its widespread image as a noble spirit, Cognac still needs to adapt to changing times and tastes.
The region can thank a coming together of technology transfers, economic and geopolitical interests for its economic rise. The Netherlands was the leading trading power during the 15th century, and it used the navigable Charente in order to load salt. The region’s wines were initially little more than a side-line business. Particularly because many of the light white wines were undrinkable by the time they arrived in Dutch ports.
More out of necessity than anything else, the spoiled cargo was distilled creating a very beneficial provision for trading ships to have on board: Long-lasting, cheap, less weight. Whether the very first Cognac was distilled on the floor of the Poitou or in a Dutch port is not completely clear. The economic advantages meant a giant leap was taken when it came to logistics. The most important trading routes at the time went to the double-continent of the Americas and to Asia, and “brandewijn” was an important factor in Holland’s rise to becoming a global player. Cognac allowed water to be stored without going foul, and thus free of germs, while also helping to limit the omnipresent problems with food hygiene.
Soon after the name Cognac showed up on a consignment list for the very first time in 1617, the double-distillation technique was developed in the region which further concentrated the alcohol content. A network of distillers and traders soon formed in each of the sea-faring nations. Names such as Martell, Rémy-Martin or Hennessy are evidence that arranged marriages between the daughters of wine-growers and a foreign merchant were the foundations on which many successful businesses were built. The Irishman Thomas Hine got his foot in the door, if you will, thanks to his brisk smuggling activities on the south coast of England. Hine is today the exclusive brandy supplier to the British Royal family.
Cognac at this time was still a long way away from the world-famous spirit that it is today. It was nothing more than a simple and cheap liquor that was used to disinfect drinking water. It soon became apparent in London’s pubs that the brandies that originated from certain places, and which when stored in oak casks for longer, tasted better. “Old coniack brandy“ was very popular amongst the English upper class and was divided up into quality levels: V.S. (very special), V.S.O.P (very superior old pale), XO (extra old). This meant an increase in reputation.
At the end of the 18th century, Denis Diderot, philosopher and publisher of the first modern lexicon, raved in his “Encyclopédie” that the town of Cognac is “fameuse” for its brandies. During his exile on the island of St. Helena, and in addition to enjoying Champagne, Bordeaux and Burgundy wines, Napoléon Bonaparte was also entitled to 12 bottles of Cognac each month. Despite the significant fluctuations during the political turmoil after 1789, the demand for Cognac exploded. The production increased from just short of five million bottles to 64 million. In the 1870s, up to 280,000 hectares were planted with vines. This is a surface area larger than all of Luxembourg.
The oversupply ultimately ended in a collapse in the price, which was then followed by phylloxera plague, and later by the world wars. It was only with the controlled new planting of the robust Ugni Blanc in the best locations that the trade organisation was able to get the Cognac recognised as Appellation d’Orgine Contrôlée in 1936, as well as the production process in the Charentaiser still. Particularly following the end of the Second World War in 1945 did the brand become synonymous with luxury and a coveted lifestyle. Cognac was enjoyed in sophisticated, “swanky” ambiance - and always pure. When this brand image was at its height, it was Monsieur Hennessy himself who personally embodied this image of luxury in a tailor-made suit, while at the exact same time embodying the reasons for the decline that was to come.
In the cocktail-loving 1980s, Cognac declined in popularity due to the perception that it was a drink for old, grey-haired men sitting around a fireplace. The crisis in the Asian tiger economies also hit its loyal customers in these countries at this time. Too much ground was planted with vines destined for cognac production, lack of demand and high production costs were pushing the branch to breaking point. In contrast to the competition in the form of vodka and white rum, which can be industrially produced from inexpensive raw materials, Cognac needs wine. And wine needs to be stored in expensive oak casks for many years, this ties up capital and alcohol is lost along the way. Even the ingenious marketing slogan “The Angels’ Share” (Anteil der Engel) did not prevent 20 million bottles simply vanishing into thin air every year. Over the long period in storage, each of the casks develops individually. Elaborate assembly is required for the brand products.
Shortly after the end of World War 2, African-Americans discovered Cognac. This was a conscious decision in order to set themselves apart from the predominantly white population that traditionally drank bourbon and vodka. This affinity continued with the brand being discovered by the hip-hop scene in the 1990s. Cognac became one of those symbols of success in the hip-hop scene in addition to more brutal symbols such as high-calibre handguns, young women in underwear and Cadillacs – which, strictly speaking, were also invented by the French.
Due to the “directness” of the texts that is typical for the scene, a number of law-abiding Cognac distillers are likely to have had a somewhat uneasy feeling about this development. That being said, every marketing agency dreams of having the products it is promoting being praised in songs such as Pass the Courvoisier (Busta Rhymes) or Hennessy and Buddha (Snoop Dogg). The branch quickly adapted. Certain manufacturers tried to create blends that would be more attractive on the club-scene in combination with new, more modern packaging. Abécassis pursues this path most consequently, selling its award-winning brandy in plain white bottles, as well as launching blends that have been expressly created for mixed drinks. The brand-name ABK6 is the phonetic abbreviation that the subsidiaries use on social media.
Even when practically all hip-hoppers nowadays associate themselves with a particular type of alcoholic beverage, up to 80% of all “YAK” purchases on the US market are made by African-Americans. The turn-over in this market has tripled since the mid-1990s. The New Yorker rapper Nas, who started his career as a drug dealer after the 8th grade, replaced Gilles Hennessy as the brand ambassador for Hennessy.
In addition to bidding farewell to the old-school playboy, the brand also bode farewell to the commandment to drink Cognac pure. The association Bureau Interprofessionnel Du Cognac (BNIC) today also supports a cocktail competition itself. At the annual International Cognac Summit, the various market segments are looked at and discussed. In 2015, the “female aspect” of the cognac-cocktail was looked at with the result being that this part of the customer base, firstly places importance on elegant packaging, and secondly, on full flavours such as vanilla, chocolate and cinnamon. An agency found out that these fragrances corresponded with the most popular perfumes.
Cognac today is practically one and the same with the region. The vineyards provide 5,000 jobs. There are an additional 3,900 jobs in the supplier industries such as in glass works, “tonnelleries” etc. 280 facilities produce Cognac and the sales of their 141 million bottles generates a turn-over of 1.6 million Euro. “As much as 30 Airbus aircrafts”; the comparison was made with the greatest of pleasure by Jérôme Durand, Director for Marketing and Communication at the trade organisation BNIC. In 2015, Cognac achieved a further 9.4% increase in the volume of product we export, and which equates with almost a 20 percent increase in value, the highest ever recorded.
Very few of the international customers will have even the faintest idea that the famous drink originates in a small town with just a mere 18,000 inhabitants. The slowly crumbling sandstone facades with their wooden window shutters could be anywhere in provincial France. What cannot be missed when exploring the town are the huge Hennessy, Martell and Rémy Martin, Courvoisier signs everywhere, which also asymmetrically divide up the market. All four together produce approximately 80 percent of all Cognacs. The value of the Hennessy brand is approximately 3 billion Euro, which indeed makes it the third-largest spirit brand in the world. A bottle from the larger selling competitors Johnnie Walker and Smirnoff costs less than half a bottle of Cognac.
The largest Cognac brands produce the smallest share of their basic wines themselves. This is what Rémy Boinaud lives from, whose family has been producing Cognac since 1640. When he strolls from the family property across to the functional buildings of the distillery, he also traverses the entire essence of Cognac. “We produce for Rémy Martin “, declared the distiller in the 24th generation as he looks over a sea of copper stills. There are a total of 41 of these, plus massive, temperature-controlled steel tanks that are operated from a central computer. Cooling water comes from their own well. With a total of 436 hectares of vineyards owned by the family with the almost unknown name, this is larger than entire growing regions in other parts of the world.
Over a million bottles are produced from the wines. “Grapes are like little babies”, adds Boinaud. You want to believe him. But in the course of the everyday work to be done, he will have little time for each individual one.
That is why the Boinauds also market their own brand, Dupont. This is, however, more for those in the know. The X.O. has the flavours of very ripe fruits and lots of wood, it takes a while until all the aromas develop themselves. Nothing for large numbers of buyers. Just like Boinaud, many of the fine, small distilleries try to stand out with individual products. Leopold Gourmel only produces organic-vintage Cognacs, identifies them according to ageing aromas of fruit, flowers, spices, and sentences can be heard, such as: “Minerality is the key to Cognac.“
Hine launched a vintage-year Cognac onto the market that was produced from only 70-hectares near the village of Bonneuil, which has the exceptionally sunny year of 2005 as its basis. With around one hundred Euro, this is certainly not a cheap tipple, but it is making strides in a market segment where cognac is increasingly establishing itself. Even when the main business of the large distilleries is the brand products, the big distilleries still have huge reserves of old cognacs. The super-premium market with its extremely limited blends has developed very dynamically. The BNIC gives exclusive blends a forum at the annual charity auction “La Part Des Anges”.
A Hennessy Paradise made from basis wines that can be up to 130 years old goes for €400 - and this is right at the bottom of the price scale. The small top producer Frapin uses somewhat older Cognacs for his “1888”, whose price is somewhere at €4,000 per bottle. A “Hennessy 8” comes in a golden flacon and costs 35,000 Euro. Rémy Martin invoices 165,000 Euro for its “Black Pearl Louis XIII“. The probably most expensive Cognac is called Henry IV Dudognon Héritage. Jeweller Jose Davalos studded the bottle made of gold and platinum with 6500 diamonds. It weighs eight kilos and contains only 100 millilitre of the extremely rare Cognac. For shrewd mathematicians: This means 40,000 Euro per glass.
Many of the buyers come from East Asia. The price in this case is a symbol of appreciation and honours both the giver and the receiver. 95 per cent of exports are therefore a decisive business area for Cognac. The French drink more scotch in a month than they do Cognac in an entire year. The business is also not running optimally in Germany in these times of increased traffic controls, calorie craziness and an increasingly militant health awareness. And in addition to these factors comes the fact that Cognac has never been able to completely shake off its image as an old man’s drink. The consumption has almost halved over the past ten years, with vodka and gin taking over this share of the market.
However, the BNIC proudly refers to a list with 160 import markets, led by the USA, particularly with qualities in the area of sales. In Europe it is the British and Germans who remain the best customers despite a fall in turn-over. Cognac also has an enormous image in Russia. A bottle was even drunk on the space-station Mir.
The third largest market in the world is China, which up to recently had been particularly conspicuous due to its double-figure growth rates. Since luxury gifts are now being included in the fight against corruption, the statistics show a clear downward trend. But some traditions just do not change, and the market is recovering. Many producers see their future here.
Trademark rights in Asia have been a source of conflict for a long time. In many languages, Cognac is the generally used term for brandy, and a country like China has its own special attitude towards counterfeits. But there is also progress being made here. Following China in 2009, India and Malaysia have accepted the indication of the geographic source in 2011. According to the survey carried out by Euromonitor International, the global market for luxury spirits will double in the coming decades. Brexit could still cause a few rough upheavals. With the fall of the currency, Cognac is becoming more expensive on the islands.
The prospects are pleasant, even if the weather does not always play along. The rain and hail catastrophes, which played havoc in large parts of Central Europe, were also felt in Cognac. “Alcohol contents are constantly on the rise as well“, states Albert Boinaud, “but we can deal with that“.