Trends in Cognac: How Brands Are Rebounding

Cognac experienced unprecedented sales during the pandemic. An inability to go to bars and restaurants caused consumers to stock up, and coupled with numerous government stimulus packages, “People had money to burn,” explains Nicolas Palazzi, owner of spirits importer PM Spirits, “and the buying patterns were nonsensical.” What was good news for the Cognac industry then, however, quickly became something of a concern, as consumer behavior shifted post-pandemic. According to a 2023 report by IWSR Drinks Analysis: “Cognac has seen sharp declines in the US – a market that accounts for over 40% of global sales.” After steadily growing in volume through 2021, “Cognac volumes in the US fell by -20% in 2022. Volumes continued to decline (-16%) in the first half of 2023 vs 2022.”

Some Cognac losses can be attributed to supply chain issues, and the fact that consumers are still working through the personal stashes of Cognac that had been acquired in 2020. Certain sources suggest that rising interest in tequila and other agave spirits has claimed some regular consumers of other spirit types, including Cognac. Hard seltzer and other canned RTDs that came up during this time have also siphoned drinkers from numerous beverage alcohol categories. None of these factors, however, entirely explains why Cognac has experienced the level of loss that it has for U.S. consumers. As a timeless — but not static — spirit category with something to prove, now is an interesting moment to look across the category for emerging trends from Cognac, as it looks to retain loyalists and appeal to new audience segments.

Understanding the “Cognac Market’

One of the inherent challenges in understanding the volatility of the Cognac market has to do with its dual personality between big and small producers, and an examination of emerging trends must start here. A majority of Cognac sales in the U.S. are claimed by just a handful of brands, including Hennessy, Rémy Martin, and Courvoisier. Palazzi points out the difficulty in how figuring out how Cognac market can pivot to reach both existing and new consumers when “A Cognac market doesn't exist. It's a Hennessy market. It's a Rémy market,” he notes. “Hennessy sells Hennessy and they happen to be making Cognac, and it’s the same thing for Rémy, and the same thing for everybody else. For the past 20 years, these brands have been pretty great at getting people's attention. And it has never been about the product.”

In other words, the major labels in Cognac that have generally relied upon brand more than product storytelling perhaps have different challenges ahead than smaller brands whose messaging may be better served by pushing the Cognac category. (One would hope that if larger Cognac brands turn the conversation with consumers toward the product, this would also benefit the smaller players, but Palazzi doesn’t believe that’s a realistic expectation.) Palazzi also points out, however, that smaller Cognac brands, whose primary market isn’t necessarily the U.S., haven’t experienced the same level of decline as the major houses. Nonetheless, across both established and emerging producers, brands are exploring numerous strategies for keeping Cognac relevant and exciting to consumers in the immediate future, and the long-term.

Big Cognac and Brand Marketing

According to Palazzi, larger Cognac brands often have a maneuverability problem, and are less nimble when it comes to making changes in the way they try to connect with consumers. Various initiatives among the legacy brands, therefore, are still poised to continue leaning in on brand image to their longtime drinkers as a signifier of luxury and lifestyle.

As an example, Rémy Martin recently released XO Night: a new, eye-catching package designed to appeal to the core, lifestyle Cognac drinkers in cities with major nightlife scenes, with activations planned in places such as Las Vegas, Los Angeles, Atlanta, Miami, and New York. A press release for the launch states: “Unlike the traditional nightcap which signals the end of the evening, a night uncapped with XO Night signifies the night is just beginning.” The bottle itself is a showstopper: a mirrored, geometric decanter that literally radiates, signaling opulence and luxury. Even for an award-winning Cognac expression, there is little acknowledgment by the brand of what differentiates what’s inside the XO Night bottle from any previous Rémy releases.

Partnerships and Collaborations

Cognac brands have often been tied with celebrity collaborations, and this is expected to continue. D’USSÉ was founded in 2012 by Shawn “Jay-Z” Carter, and quickly entered the top five brands sold in the U.S. 50 Cent partnered with Raymond Ragnaud, a longtime producer in Cognac, to launch Branson XO by 50 Cent in 2018, and successfully positioned it as the official Cognac of a number of sports franchises.

While celebrity collaborations have been around for a while, more avant-garde collaborations might be what's coming next. “Brand collaborations with musicians are not new,” says ms. franky marshall, Cognac expert, educator, and modern bartender, “however I do see more partnerships with artisans and professionals from various sectors. Painters, designers, chefs, actors, cultural shape-shifters...and this is not just happening with the top four, but with other houses as well,” she says.

“Working with artists or influencers is a great way to modernize and dynamize the image of Cognac,” says Francis Abécassis, founder of ABK6 Single-Estate Cognac. “It contributes to adding a touch of modernity and allows us to reach new audiences and new markets.” ABK6 recently collaborated with comic strip artist Audrey Sedano on a label for its limited-release ABK6 Cognac Reserve Collection Artist 4.

Emerging Brands and Updated Styles

Cognac’s dual personality also plays out where the nature of the spirit itself is concerned. While some drinkers, especially regular consumers of the major labels, envision Cognac as a signifier of a flashy, contemporary lifestyle, others believe Cognac to be something stuffy or old-fashioned, and new producers and products entering the Cognac market aim to combat that with new approaches.

Launched in 2023, Martingale Cognac is the first release by a family that has been producing Cognac for major labels for a century. With a contemporary, geometric bottle, the liquid is produced to emphasize Cognac’s lighter capabilities, with tasting notes indicating “a well-rounded fresh, floral and fragrant take on Cognac meant for a new generation.” (One can’t help but wonder if these notes hope to catch the attention of tequila drinkers who are allegedly stealing everyone’s thunder.)

A wave of experimentation may also help bring drinkers in from other categories to Cognac. “Certain brands are experimenting with, and are producing, liquids finished in wine casks, and also American oak and even ex-Bourbon barrels, in an effort to appeal to a wider audience, including whiskey drinkers,” says ms. franky. She notes, however, that some of these products, while undertaken by Cognac producers, preclude using the Cognac designation.

Reaching Generation Z

With half of Generation Z reaching legal drinking age by the end of 2024, producers of every type of beverage, including Cognac, are trying to capture the attention of this crucial demographic, who have more choices than ever when it comes to alcohol consumption. Gen Z’s values are also at the forefront and are markedly different from those that came before: sustainability, authenticity, and inclusion aren’t just bonus points to these potential drinkers, they are cost of entry.

Inclusion

Cognac brands will look to differentiate along these lines wherever possible. D’USSÉ, for example, recently announced the appointment of a new cellar master, Agathe Boinot, who will become the youngest woman in her role for any major Cognac house. “I will champion representation for women in Cognac, who have played an important but largely invisible role,” says Boinot. “I aim to bring visibility to our work, inviting more women and younger generations to Cognac’s possibilities in the process.”

Sustainability

Sustainability initiatives aren’t just a marketing strategy for Gen Z, they’re future-proofing measures, especially in regions already known for warmer climates, and brands may increase messaging along these initiatives. “Many houses have and/or are in the process of obtaining certifications in environmentally friendly practices, and taking other steps to ensure the various elements of production are respecting the environment,” says ms. franky. Courvoisier, one of the category’s best-selling brands, is already staking a claim as the first Cognac brand to earn the Butterfly Mark, awarded to luxury brands demonstrating positive impact on the climate and local communities.

Collaborations & Partnerships

Artist collaborations are also an obvious part of reaching Gen Z. Hennessy recently released “Made for more,” short-film campaign featuring breakout stars Tenaya Taylor and Damson Idris, specifically aimed at younger drinkers. According to Julie Nollet, Hennessy’s Global Chief Marketing Officer: "Hennessy is well known everywhere but people don't always know about how versatile it is,” she says. In addition to the campaign’s younger stars, it also highlights the spirit’s cocktail possibilities. “[The ‘Made for more’ campaign] shakes up the brand perceptions and builds on its legacy for a new generation." Hennessy is also working with the NBA, taking the affinity that Black Americans have traditionally had with the brand into the future.

Cognac Cocktails

The push toward cognac cocktails has larger implications for the category than just emphasizing its versatility. “There's more of a need to be making money on premise,” says Palazzi, as retail sales continue to be affected by overstock and competing factors, such as RTDs.

On that score, expect to see Cognac brands emphasizing more and more cocktail recipes, especially those that lean on fresher flavors that help move the category away from a heavier, stuffy reputation. With a classic Sidecar as a formula, the “Made for more” campaign by Hennessy above puts forth a spin that amounts to a Cognac margarita. Courvoisier offers a long drink approach to Cognac with grapefruit and tonic. Camus recently released a menu of spring and summer offerings, featuring an “Herbs Inn” cocktail that goes so far as to mix the spirit with Sauvignon Blanc for a lower-ABV option.

While there is no one-size-fits all approach to shaping Cognac’s future, what’s clear for the spirit in the years to come is that it is definitely a space to watch.