The cognac market - France

The Cognac market experienced a downturn in 2020 due to the COVID-19 crisis, with an 11.3% drop in volume and 22.3% decline in value. Nonetheless, it showed strong resilience with a sharp recovery in 2021.

Cognac production remains geographically constricted by AOC regulations within certain French regions, with the lion's share of 97.6% of its production being exported in 2021, particularly to high-demand markets like the NAFTA zone and East Asia. The United States and China are major consumers, with cognac often perceived as a luxury beverage, leading to a trend of "premiumization" where producers are focusing on higher-priced and aged categories (V.S.O.P. and X.O.) to cater to these markets.

Additionally, a growing interest in environmental consciousness and organic cognacs signals new market opportunities, with producers increasingly adopting sustainable practices.

Navigating the Prestige and Growth of the Cognac Market in France

In recent years, the cognac market in France has experienced a notable trajectory of growth, presenting as a long-term upward trend worldwide. Cognac, an illustrious French spirit, has maintained its prestigious status with sales skyrocketing to nearly €3.6 billion by 2021, reflecting steady progress with average annual growth rates catapulting up to 7.6%. Even after a slump due to the health crisis, the sector rebounded with cognac shipments surging by about 16% in volume and approximately 31% in value between 2020 and 2021, showcasing remarkable resilience and a clear demand for this luxury product. As a high-value export, cognac commands the lion’s share of French spirit exports, making up roughly 75% of the export value despite just constituting a little over 32% in volume. It is a testimony to the product's premium nature and France's international reputation for indulgence and quality.

The U.S. and China emerge as heavy consumers, with the former buying between 110 and 120 million bottles and the latter over 50 million bottles, reflecting a broad appreciation for this spirit across diverse cultures. Interestingly, the consumption of cognac within France trails far behind its export success. Representing less than 5% of its total market, the French largely associate cognac with the corporate world, while its image in the U.S. is considerably more fashionable, often found in bars and nightclubs. In China, cognac is particularly prized at social events, signaling its role as a beverage of celebration and prestige. However, the overall alcohol consumption in France has been on a steady decline, with per capita consumption dipping, particularly significant in wines. While the French alcohol market has seen a decrease, the cognac market stands apart, possibly due to its positioning as a luxury item rather than a staple alcoholic beverage.

Regarding cognac’s market structure, the sector is tightly concentrated, with four major conglomerates—Hennessy, Rémy Martin, Martell, and Courvoisier—dominating the global market with a combined 80% share. Despite this oligopoly, there’s a considerable presence of other players in the market, including nearly 4,300 winegrowers and various trading houses and professional distillers. 

Major Houses Dominating the Cognac Landscape

The cognac market is characterized by its level of concentration, with a handful of major players commanding the majority of market share. These titans within the cognac industry are not only steeped in history but also in market power, managing to maintain their foothold amidst changing consumer trends and global demands.

• LVMH's Hennessy: A Synonym for Cognac Excellence - Hennessy, under the umbrella of luxury goods giant LVMH, is a force to be reckoned with in the cognac world. Its legacy, which extends over 250 years, has positioned it as a global cognac ambassador, renowned for its range that includes the well-celebrated Hennessy V.S, V.S.O.P, and the prestigious X.O. The firm’s mastery in blending has ensured its prominence in both established and emerging markets.
  
  
• Remy Martin: The Epitome of Fine Champagne Cognac - Rémy Martin, associated with Rémy Cointreau, is another emblematic house that concentrates on cognac production exclusively from the prestigious Grande Champagne and Petite Champagne regions. Its reputation for producing fine quality cognac is reflected through its revered product line, including the sought-after Louis XIII, a symbol of luxury and craftsmanship.
  
  
• Martell by Pernod-Ricard: A Heritage of Distinction - Martell, part of the Pernod-Ricard conglomerate, is one of the oldest cognac houses with more than three centuries of experience. It is renowned for its unique production process that emphasizes the removal of sediments to ensure a cleaner wine for distillation, resulting in a cognac that is smooth and rich in character.
  
  
• Courvoisier: The Toast of Historical Legends -  Courvoisier, now under the umbrella of Fortune Brands, is distinctive among the major houses for its deep historical connections, even acclaimed to have been the choice of Napoleon Bonaparte. The brand's commitment to quality and innovation keeps it at the forefront of the industry, appealing to connoisseurs and new consumers alike.

Together, these houses stand as pillars in the world of cognac. Their intertwined narratives of heritage and innovation encapsulate the essence of a centuries-old craft that continues to charm and captivate the palates of global audiences.

Inforamtion

• Number of pages : 30 pages
• Format : Digital and PDF versions
• Last update : 03/02/2022

Summary and extracts

List of charts

• Trends in cognac market size
• Breakdown of exports by volume
• Breakdown of exports by value
• Value of cognac exports
• Main cognac-buying countries
• Breakdown of exports by type of cognac, by region
• Quantities of alcohol consumed by the French
• Percentage of the population having consumed alcohol in the past 7 days, by gender
• Change in quantities purchased per buyer household
• Breakdown of worldwide spirits consumption
• The best time to drink cognac
• The best place to drink cognac
• Reasons for buying a bottle of cognac
• How much consumers are willing to pay for a bottle of cognac
• Market share in cognac sales
• Breakdown of sales on a spirit sold for €16.50, between margin and tax
• Breakdown of physical sales by distribution channel, by volume