The global cognac market size was valued at USD billion in 2022 and is projected to reach USD billion by 2031, registering a CAGR of 4.6% during the forecast period (2023-2031).
Cognac is a premium brandy from the Cognac area of France. It is well-known for its refined flavor profile and link to luxury and celebration.
The market is expected to grow at 4.6% CAGR due to the growing demand for premiumization and luxury drinking habits, especially in Europe and North America. In the future, the global acceptance of luxury alcoholic beverages among millennials is predicted to increase the reach of the cognac market. The rarity of cognac production significantly impacts the growing appeal of artisan products. Cognac manufacture, like champagne, is exclusively limited to its producing region Cognac. As a result, all the grapes needed to manufacture Cognac come from the same region, and the soil influences such goods.
Premiumization and Luxury Demand
The global premiumization market trend, in which customers are ready to pay more for higher-quality and distinctive products, has substantially impacted demand for luxury spirits such as Cognac. The link of Cognac with sophistication, prestige, and a distinct sensory experience corresponds well with consumers' expectations of premium items. According to the International Wines and Spirits Record (IWSR), global Cognac sales hit 96.2 million cases in 2020, a 2.2% rise over the previous year. This increase demonstrates that demand for Cognac remains strong even in difficult market conditions.
Furthermore, brands such as Louis XIII recognized for making ultra-premium Cognacs, have acquired popularity for their luxurious expressions. For example, Louis XIII sells a Cognac blend called "Louis XIII Black Pearl AHD," which may cost thousands of dollars per bottle. This illustrates the brand's emphasis on meeting upscale demand.
To assure authenticity and quality, Cognac manufacturing and labeling are strictly regulated by geographical indications and precise requirements set by the government. Any changes in laws or difficulty in reaching these criteria pose issues for Cognac producers and impact the market. Cognac's Appellation d'Origine Contrôlée (AOC) classification is strictly enforced. This appellation imposes strict standards on grape types, distillation methods, age, and blending. Any modifications or difficulties in achieving these conditions can impact a product's ability to be labeled as "Cognac."
The European Union's trade accords and discussions may also impact Cognac's regulatory environment. Changes in trade rules or agreements might complicate labeling, certification, and export regulations. Cognac's adherence to tight laws is critical for retaining consumer trust and accurately representing the product's quality and origin.
Innovation and Product Diversification
Brands can take the chance to innovate and diversify their Cognac products to reach a broader consumer base and match changing demands. Introducing new expressions, experimenting with aging procedures, and exploring unusual flavor characteristics can generate excitement and differentiate companies in the market. Rémy Martin, a well-known Cognac maker, introduced the "Rémy Martin Carte Blanche à Baptiste Loiseau" limited edition. This statement highlighted Rémy Martin's Cellar Master's ingenuity by allowing him to pick and mix eaux-de-vie without regard for age or tradition. This invention drew the attention of Cognac fans and collectors, demonstrating the value of variety.
According to the International Wines and Spirits Record (IWSR), the worldwide Cognac market has demonstrated tenacity and adaptation in the face of adversity, with the premium and ultra-premium segments continuing to prosper. Diversification within these divisions through novel offers can help drive Cognac’s market growth.
The global cognac market is segmented based on grade, buyers' type, distribution channel, and region.
The grade is further segmented into VS, VSOP, and XO.
VS holds the major share of the market.
VS Cognac, often known as "Three Star" or "Very Superior," is Cognac's most recent and least-aged expression. It must be matured in oak barrels for a minimum of two years. VS Cognac has vivid fruit aromas and a simple taste, making it ideal for combining cocktails.
VSOP Cognac is matured in wood barrels for a minimum of four years. Compared to VS Cognac, the longer age period leads to a more developed and complex flavor profile. VSOP Cognac frequently exhibits fruit, spice, and vanilla aromas, making it perfect for drinking and mixing.
Based on distribution channels, the market is fragmented into Direct and institutional sales, modern trade, convenience stores, online retailers, modern grocery retail stores, specialty stores, and liquor stores.
Convenience store is the highest shareholder in the market.
Convenience stores are smaller retail locations offering various products while emphasizing consumer convenience and quick access. Cognac may be accessible in convenience stores catering to frequent and impulse buyers.
Liquor stores are specialized stores that sell alcoholic beverages such as spirits, wines, and beers. They provide users with a specific variety and knowledge in selecting various types of spirits, including Cognac.
By buyer type, the segment can be further bifurcated into households, institutions, and restaurants/pubs.
Households led the market.
Individual customers who buy Cognac for personal use, gifting, or collecting are classified as household purchasers. This market category comprises enthusiasts, connoisseurs, and casual drinkers looking for premium and luxury spirits for various events. Cognac is frequently served as an after-dinner drink or an ingredient in a cocktail. It's also becoming more popular as a gift item.
Restaurants and pubs
Restaurants and pubs are hospitality establishments that provide Cognac as part of their beverage menu. Fine dining restaurants, bars, lounges, and casual dining businesses that cater to consumers looking for an eating and social experience are included in this section.
The global cognac market is analyzed across North America, Europe, Asia-Pacific, the Middle East and Africa, and Latin America.
North America holds a sizeable global market share and is expected to boost at a CAGR of % during the forecast period. North America has the greatest global market share. Factors like dense population and expanding demand for distilled spirits in the United States and Canada drive up sales of these spirits. According to the Distilled Spirits Council of the United States (DISCUS), almost 16.5 million 9-liter cases of brandy/cognac will be marketed in the United States by 2021. Furthermore, the rising demand for artisanal spirits and an increasing number of craft distilleries in the region contribute to the market's expanding potential. For example, Copper and Kings American Brandy Co. released its current American Craft Apple Brandy edition in September 2019. The company added a new line of apple brandy matured in Kentucky bourbon and new American white oak barrels to its product offering.
Recent studies show that the United States led the list of the top ten cognac export destinations in 2018, with an almost 5% increase in volume to 86.5 million bottles. The total volume of exports from the United States equaled that of the other nine nations: Singapore, China, the United Kingdom, Germany, France, Latvia, Hong Kong, South Africa, and the Netherlands. Black Americans were historically among the first to be introduced to the spirit, accounting for a substantial share of customers. However, cognac firms' persistent attempts at powerful advertising in recent years have spurred a wave of interest among white customers in North America.
Asia-Pacific is predicted to rise at a substantial CAGR of % throughout the forecast period. Based on the market insights, a considerable shift from whiskey and vodka to brandy has been seen, and the increased popularity of cognac-based drinks has contributed to regional expansion. According to the International Journal of "The Drinks Business," cognac sales in China will climb by 56% in 2022, while premium brandy sales will increase by 31%. Furthermore, the increased demand for locally manufactured brands has compelled corporations to focus on such needs. For example, in January 2021, Paul John Distillery released a new brandy called "Paul John XO Grape Brandy," which is created from Indian grapes harvested locally. Courvoisier has already dabbled in this area by releasing the 12 and 21 series. China and India are among the region's prospective global markets because of their vast consumer bases and the rising disposable incomes of middle-income consumers. Such advances increase the regional market share.
Europe is predicted to see an increase in spirits sales due to an increase in the number of food service chain outlets offering a variety of spirits, increased customer buying power, and expansion in the tourism industry. For example, the European Transport and Tourism Committee launched a new campaign, "Taste Destination Europe," in September 2019 to increase demand for tourism spirits across the EU. This internet campaign draws tourists' attention to European spirits and distilleries throughout the region. Cognac is a French region located in the southwest of France. This location is well-known for its favorable climate and soil conditions for cultivating the grapes required for Cognac manufacture. The presence of long-established Cognac houses, some of which have been in business for centuries, emphasizes Europe's market position. In recent years, the region has also seen increased demand for fruit-based brandies and cocktails, broadening the growth scope. Furthermore, as the trend toward healthier living grows, customers seek beverages derived from natural botanical ingredients and fruit flavor combinations.
The Middle East and Africa (MEA) region presents distinct potential and challenges. While generally linked with Western markets, Cognac is slowly gaining traction in MEA due to changing customer preferences, economic progress, and a growing luxury culture.
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