just the Answer: Thomas Hine & Co's MD, François Le Grelle

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Two months ago, CL World Brands sold the Thomas Hine & Co Cognac house to EDV SAS for an undisclosed fee. just-drinks caught up with Hine's MD, François Le Grelle, at the Cannes World Exhibition last month to talk about the change, what life is like away from CL's parent, CL Financial, and why Chinese Cognac drinkers will prove more loyal than Japan's.  


just-drinks: What plans are you making for the future with your new owners?

François Le Grelle: We want to continue to work on the premiumisation of the brand. The recognition level of the brand is very high but we feel that it could be upgraded year to a more luxury channel. It's clear that if we can make Hine more luxury than it is today - and I think we are already at one of the highest levels (of luxury). This is something that we have to work on.

j-d: There has been speculation over the price EDV SAS paid for Hine. Can you confirm the figures? (Reports estimated the price at between EUR40m (US$53.5m) and EUR60m.)

FG: I'm not going to talk about it, except to say that the price range quoted, there is nothing wrong about this. 

j-d: Was it a relief to be out from under CL Financial? (CL was bailed out of a liquidity crisis in 2009 and is now under the control of Trinidad & Tobago's government.)

FG: It was not a surprise (to be put up for sale) because we knew that (former CL-owned brand) Appleton was sold to Campari. There's not too many brands like Hine for sale every day, so there were a lot of people interested.

Now we are with a French family so we are very happy. All the team will stay, there will be no change. The team is one of the assets of the company.

j-d: You say there were a lot of interested buyers. Were they interested in your stock (of Cognac)?

FG: You are right, if you read the newspapers or listen to the rumours. And it's absolutely true when you see how other small Cognac houses have been bought and then resold a few months after. The thing is, everyone is talking about something without knowing the reality. 

It's clear that the stock is a secret - the profile of the stock is definitely the biggest secret. If you have the profile then you can read the future of the company. You know what the company can deliver or not. And I can tell you that this is something that we did not provide.

j-d: So nobody knows what stocks you have?

FG: And nobody will know. For the Hine purchase, the volume was known. The age was known, more or less. But nothing regarding the taste. Nothing very detailed regarding the different eau de vie.

j-d: That's all now behind you. What markets are you looking to for the future?

FG: There are some markets on which we will have a dedicated focus - Africa and in some South American countries. This is where we want to go, but we will first consolidate where we are, to reassure the markets that Hine is in very good shape.

j-d: Is Cognac demand in China starting to come back?

FG: I believe that we are on a consolidation process. It's clear that the volumes that we have today are not as high as expected and are less than what we used to do in 2012. There is no doubt about this. 

But this is an opportunity. The (slowdown) is very positive because it will give us time to rebuild the parts of the inventory that have been used too fast. 

Some people are afraid of the situation (in China) and they compare it with the Japanese market in 1991. But the environment is totally different. Chinese, compared to Japanese, are really in love with the product. With the Japanese it was more a way of business life. In China, the people know more about Cognac and really enjoy the product. If you look at the reasons why the market is declining, it's mainly for political reasons.

But we don't depend too much on one market. You have some companies that are selling 70% in China. We would never do that. We look for a balance.

j-d: Is the price of eau de vie in the free market starting to fall?

FG: The problem with the free market, when you have nothing available, then all the worst quality that was not for sale during the normal period, comes to the top of the market. Cognac houses are having to buy this but they will use just a small percentage and blend it over a long period to not affect quality. But we are not in that situation.

In five years, where will the price (of eau de vie) be? I don't know. But I suspect that this level that we have, one day will start to decrease.

j-d: But not yet?

FG: Some people think it has started to happen. I'm more cautious about this. 

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