BROWN SPIRITS: COGNAC/ARMAGNAC
Value sales exceed volume in Cognac
While the impact of Covid-19 on Cognac sales is yet to be officially quantified by research and analysis firms, we do know that value sales growth in travel retail has been stable recent years. Charlotte Turner reports.
Above: London Heathrow’s Fine Cognac mix in Terminal 3.
Right: Chabot XO Armagnac Silver Coeur 50cl.
O
ne of the giants of the Cognac world reported signs of distress in January
when it released its fiscal nine-month results for 2019 (April-December). Global cognac brand Rémy Martin – part of the Rémy Cointreau group – registered a decline of 1.6%, citing that strong momentum in China was offset by a number of factors such as a decline in tourism in Hong Kong, slow stock replenishment in the United States and changes in the distribution network, mainly in Western Europe. The house is yet to report its annual
results, but TRBusiness is in no doubt that they will refer to the outbreak of
“Although Cognac volumes fell in 2018, value sales increased. This trend is likely to continue with the category seeing relatively flat volume sales offset by value growth.”
Sandra Newman, Travel Retail Research Director, IWSR Drinks Market Analysis
64 TRBUSINESS
Covid-19 and mention its impact on sales in Asia and elsewhere.
which will eventually be contained. Looking at the latest full-year data available from International Wine & Spirits Research (IWSR) Drinks Market Analysis, the total Cognac category (including domestic and TR sales) experienced a -2.0% sales decline in 2018
versus 2017 (and forecasted up +0.7% CAGR 2018-2023). However, the spirit performed better in the travel retail channel, according to
Sandra
Newman, Travel Retail Research Director at IWSR Drinks Market
Analysis.
While the outbreak of Covid-19 poses a serious risk to duty free businesses in all categories and in all parts of the world, there will be a recovery; whether that is in six months, a year or even two. It is therefore important to
look at the natural evolution and development of the category outside the context of the recent outbreak,
“Cognac was still growing in Asia
– which is travel retail’s biggest regional market for the category – in 2018,” says Newman. “Until we have analysed the 2019 data we can’t say if there was a slowdown in Cognac volume sales last year. “Although Cognac volumes fell
in 2018, value sales increased. This trend is likely to continue with the
MARCH 2020
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