China, which has been the top importer by value of Cognac for the past two years, offers enormous potential to growers and Cognac houses whose sales are taking off around the world, industry representatives said this week.
“For more than two years, China has been the top market by value for cognac and, when you think about the growth of the Chinese economy, that opens up some very interesting prospects,” said Jean-Marc Morel, chair of the Cognac industry association Bureau National Interprofessionnel du Cognac (BNIC).
In 2012, the United States was again the top importer by volume of cognac with 139.335 hectoliters, well ahead of Singapore (82,057 hl) and China (68,906 hl), according to BNIC statistics published in mid-January.
The same data shows that between 2011 and 2012 shipments of Cognac to these two Far Eastern countries grew by close to nine percent.
“A large proportion of the Cognac consumed in China comes in through Singapore, so in volume terms the Chinese market is not far behind that of the United States,” explains Jean-Marc Olivier, a consultant with the accountancy firm PWC and author of a new study released to mark the Journée du Cognac, a celebration of the industry.
For several years, China has been the driver behind Cognac’s rapid growth after a serious economic slump between 1995 and 2005. That’s partly linked to a major marketing offensive by the major Cognac houses targeted at China, where the first bottles of the celebrated eau-de-vie were imported at the beginning of the 19th century.
“Cognac has been long been consumed in China and it’s now a mark of middle-class success, while wine consumption is less typical,” says Olivier, the former chief executive of the Courvoisier Cognac house.
According to Morel, the Chinese enjoy both VSOP (very superior old pale) – aged for five or more years – and XO (extra old) – aged for at least 15 years – and will drink it before, during and after a meal.
According to the PWC study, local spirits – mainly baijiu – continue to account for 99 percent of Chinese consumption by volume and 94 percent by value. However, Cognac accounts for half of the 1 percent share of the market taken by imported spirits; whisky has 41 percent.
“There is rapid growth in demand for this product, and as China develops and the standard of living increases, the number of consumers will grow,” Kong Quan, China’s ambassador in France, told an audience of 700 industry representatives.
According to him, Cognac is largely drunk by the Chinese urban middle class.
“With rapid urbanization and a middle class of 700 million within a few years, you can expect a significant proportion of new consumers,” Kong said.
“Last year, we sold a million 9-liter cases, making our Cognac the number-one Western spirit in China and the first Western label to reach a million cases,” says Morel, who is also chief executive of the Martell cognac house.
The Chinese ambassador has made a commitment to work to work alongside the industry in the battle against counterfeiting, and has confirmed that strengthening legal protection for these products is a priority for his government.
In 2009, Cognac became the first foreign product in China to receive the protection of a geographic indication.