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China's Cognac market has plenty of room for growth and Pernod Ricard's Martell is set to continue to benefit more than its rivals, according to Sanford Bernstein analysts.

Cognac's explosive value sales growth in China shows no sign of slowing, Bernstein said this week. In a detailed note on the global Cognac industry, it predicted "good growth" for all the major Cognac houses in 2012 and beyond, driven by China and a "modest revival" in the US.

China's thirst for premium Cognac in particular has fuelled rapid value sales growth for the category. According to Bernstein, in 2010, Greater China represented 18% of global Cognac volumes but 34% of global Cognac sales by value. 

This has benefited Pernod's Martell brand specifically, which is the strongest operator in China's premium Cognac segment. It is a trend that has led to Martell becoming the fastest-growing of the four major Cognac houses, which also include Hennessy, Remy Martin and Couvoisier. 

Bernstein said: "Martell is likely to continue to be the fastest grower because it has the highest exposure to highgrowth/XO China and the lowest exposure to low-growth/VS Europe and US." The analyst group highlighted Beam Inc-owned Courvoisier as the weakest of the four houses globally, due to its small presence in Asia and its strong exposure to VS markets in Western Europe, such as the UK.

Overall, Hennessy, which is 34%-owned by Diageo, remains clearly the largest player in global Cognac. It has 39% and 38% shares of global volume and value sales respectively.

Martell and Remy Martin have 14% volume shares, but their value shares are 21% and 18% respectively. Courvoiser has an 11% volume share and a 7% value share, according to analysis by Bernstein and the International Wine & Spirit Research (IWSR).


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