Will China come back to Cognac?

Will China come back to Cognac?

Plenty has already been said about the sticky situation that Remy Cointreau has found itself in in the last year, due mainly to its heavy dependency on Chinese fans of international spirits. Enough has also been said about Pernod Ricard's similar predicament.

Both companies have seen sales of their flagship Cognac brands in China plummet following the introduction of anti-extravagance measures and an anti-corruption programme since Xi Jinping took over as head of the Communist Party in late-2012. Peculiarly, of the international spirits that have been hardest hit, it has been Cognac that has borne the brunt.

The French pair will see the China crisis continue for a while to come, with one analyst forecasting yesterday that “we expect some normalisation of business in China from FY15”. But, what is even more worrying is not that the bounceback is still a way off, more that there is a distinct possibility that China's big spenders could choose to give up on Cognac altogether.

Have Pernod and Remy got long-term plans in place to entice those Chinese drinkers back to Martell and Remy Martin?

We can but hope so.

Expert analysis

The Chinese Spirits Market: What Consumers Drink and Why?

The Chinese Spirits Market: What Consumers Drink and Why?

This report provides the results for the Spirits market in China from Canadean’s unique, highly detailed study of consumers’ Consumer Packaged Goods (CPG) consumption habits, and forms part of an over...read more