Cognac sales in China last year overtook whisk(e)y sales for the first time since 2004

Cognac sales in China last year overtook whisk(e)y sales for the first time since 2004

Cognac producers are reaping the rewards of entering China's international spirits market early, according to recent research.

A report from The IWSR, released late last month, has found that sales of Cognac in China last year overtook whisk(e)y for the first time since 2004, the year that Scotch began its meteoric growth curve in the country. The Cognac market in China grew by 17.5% last year to 1.9m cases, according to The IWSR Spirits in China Report 2011.

Whisk(e)y, meanwhile, grew by a more modest 2.8% in the year.

“Cognac producers entered China far earlier than other categories, so Cognac continues to benefit from those long-term investments,” the report noted.

“The whisk(e)y market has developed in a way that is unsustainable for mid-sized players. Most of the market is still accounted for by contracted outlets, and contracts have become very expensive. Brown-Forman and Bacardi have cut their investment in China, with subsequent volume loss. Only Pernod Ricard's Chivas Regal and, to a certain level, Diageo's Johnnie Walker Black have a certain consumer pull rather than brand push, through brand availability or promotions.

“Most young Chinese consumers of imported spirits would not recognise the difference between whisk(e)y or Cognac when they consume their drinks mixed with soda, fruit juice or green tea, but they certainly recognise the status that the different brands impart.”

Consequently, Cognac brands rule the roost in imported spirits, led by Martell, Hennessy and Rémy Martin.  All three brands saw double-digit growth in percentage terms last year, while Hennessy continues to lead the market, with Martell closing the gap in 2010.