Comment - Cognac makers toast China
China's Coeur de Cognac
Cognac's reputation as the celebration spirit of choice in one of the world's fastest growing economies is reaping rewards for French drinks firms.
Premium Cognac is a must-have party accessory in modern China - just ask the workers in south-western France tasked with filling super-size flasks of the stuff for Chinese weddings.
Remy Cointreau today (22 April) became the latest French drinks firm to benefit from the trend. China drove a 28% rise in like-for-like Remy Martin Cognac sales that propelled the group to a 13% rise in net sales for its full-year.
However, group sales of Champagne, the celebration tipple of most western markets, tumbled by 23% for the year.
This is no fluke result, as many will be aware. Last week, Moet Hennessy reported that strong demand for Hennessy Cognac in China helped the business to rebound in the first quarter of 2010.
In January, Pernod Ricard reported a 16% rise in value sales for Martell Cognac in China for the six months to the end of December. It has also launched a Martell boutique in Hong Kong airport.
There is a common misperception that marketing is a foreign word in France. Yet this is certainly not the case in Cognac, where nearly all of the region's spirit is exported. Producers, with a little help from the French Trade Commission and colonial British heritage, established a firm footing in Hong Kong back in the 1980s. Hong Kong became the number one market in terms of per capita consumption.
Since Hong Kong reverted from British to Chinese control in 1997, the floodgates have opened on a market thirsty for a piece of western culture and with a palate groomed for brown spirits. Hong Kong's decision in 2008 to drop all excise tax on wine and spirits has fuelled Chinese consumption further.
When you consider that China has more than 1bn inhabitants and is likely to become the world's largest economy this side of 2050, Cognac's future looks bright.
Dominique Hériard Dubreuil and Jean-Marie Laborde will be drinking a toast to eastern promise this evening.
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