Cognac & Brandy Market Size, Share and COVID-19 Impact Analysis, By Type (Value, Premium, High-end Premium, and Super Premium), By Distribution Channel (On-Trade and Off-Trade), and Regional Forecast, 2022-2029

The cognac & brandy market size was valued at USD 11.67 billion in 2021 and is projected to grow from USD 12.66 billion in 2022 to USD 18.17 billion by 2029, exhibiting a CAGR of 5.30% during the forecast period. The global COVID-19 pandemic has been unprecedented and staggering, with cognac & brandy experiencing lower-than-anticipated demand across all regions compared to pre-pandemic levels. Based on our analysis, the market exhibited a decline of 0.46% in 2020 as compared to 2019.

Cognac & brandy can be any distilled spirit made from the fruit juice base of white grapes. The global popularity of premium alcoholic liquors and the demand for craft beverages among millennials is projected to broaden the scope of the market in the upcoming years. According to the “International Wine and Spirit Research,” 2019, the overall spirits volume consumption in the U.S. rose by 2.3%, led by an increment of 4% in the cognac segment. Moreover, both spirits are experiencing healthy growth, owing to the rising adoption of cocktail culture, surging socialization at restaurants and bars, and the escalated preference for premiumization in the food and beverage, which further propels the market.  

COVID-19 IMPACT

Spirits Production and Supply Hurdles amidst COVID-19 Led to Sluggish Market Growth

Since 2020, the spirits market including cognac & brandy witnessed a drastic change during the COVID-19 pandemic. The sudden outbreak of the COVID-19 pandemic widely caused a dip in the sale of products and profit outcomes of the manufacturers due to the stringent government policies and supply chain hurdles. According to the International Wines and Spirits Record, 2020, the markets in countries such as India and South Africa experienced partial or full lockdowns which in turn affected the consumption of the spirits, which exhibited a decline of 68%. Moreover, the shortage of manpower in production units and difficulties in the procurement of raw materials created a number of hindrances for the brewing industries. The prominent players in the market such as Remy Martin, Pernod Ricard, and Diageo also faced a huge loss in their import and export activities due to the stringent government regulations imposed on the production and supply of alcoholic beverages. According to Remy Cointreau, sales were down by 1.4% during the year 2020-21. Events such as ProWine trade fair organized for wines and spirits were also delayed as mass gatherings were prohibited during the pandemic phase. Although, after the fainting effects of COVID-19, the manufacturers are focusing on their production and supply systems, which will help them overcome their losses and maintain their brand position across the globe. According to the “National Library of Medicine,” 2021, premium spirits will witness a growth in its share by 13% by the end of 2024, as consumers are still in favor of the premiumization trend and are willing to try a variety of cocktails and high-end spirits.

LATEST TRENDS

Growing Trend of Consuming High-Quality Spirits to Aid Growth Prospects

The demand for super-premium and luxury drinks has been rising at a significant pace and is expected to witness a remarkable growth in the coming years. The growth of this segment is mainly attributed to the growing trend of socialization, escalated demand for novel high-end alcoholic beverages, and rising affordability of best-quality cognac & brandy. According to the “Spirits Business Magazine,” 2022, Europe witnessed a spike in its sales of brandy by 8.1% in 2021. Within this region, France also experienced a colossal growth of 23.4% in its sales volume of the cognac segment. However, the pandemic has also affected the spirits industry in terms of production, sales of liquor, and profit outcome. Since the start of the pandemic, home-drinking habits of consumers have changed to “ultra-premium” drinks such as super premium brandy, special old pale, and very superior old pale as the customers are willing to pay extra for high quality beverages while keeping the health aspect in mind. Furthermore, this increment in demand directly shifted toward super-premium spirits from retail sectors to other online shopping platforms that contributed to the market growth. For instance, in February 2022, Bacardi India launched “Good Man Premium Brandy,” the first-ever spirit, specially designed for the domestic consumer base. Furthermore, the augmented drinking culture in pubs and bars, and growing awareness about the health-imparting properties of brandy such as anti-inflammatory, antidepressant, and anti-aging potential further propel the market growth.

DRIVING FACTORS

Rising Cocktail Culture to Favor Market Growth

Alcohol consumption has become a social norm during special events and other festivities, especially in developed countries such as the U.S. and the U.K. where most individuals prefer to enjoy a drink in their leisure time. Cognac and brandy are widely popular due to their complex flavor and subtle texture which can be enjoyed in cocktails or on their own fits into the growing cocktail culture and is likely to fuel the spirits’ sales in the upcoming years. Besides this, due to the surging ready-to-drink cocktail category or canned cocktails popularity amongst the millennials also contributes to the growth. Thus, several companies are aiming toward increasing their production capacity of superior quality drinks with a strong focus on ingredient innovation. For instance, in May 2022, Bardinet, a French brandy maker announced the launch of its new flavored coffee flavored brandy which can be used with “Barista cocktails” in the U.K.  The product is inspired by the French Café culture and the manufacturer is further working toward adding an array of indulgent flavors to its cocktail recipes. Similarly, in February 2022, Campari Group introduced its two new high-end cognacs such as “Quintessence” and “Revelation” under its Grand Marnier brand. Campari is eyeing the rising cocktail culture in the U.S. and thus, launched the new trending drinks which can be used in the number of cocktail preparations.

Emerging Influence of Digitalization on the Young Population to Lead Market Growth

The consumption of alcoholic beverages is increasingly becoming common amongst people globally as a tool of socialization. Utilization of online social media sites such as Facebook, Instagram, and YouTube has increased in recent years and created a modern environment in which Gen Z and young adolescents are exposed to various alcohol related-content and are influenced by a variety of alcoholic brands. Research by “Journal of Medical Internet Research,” in 2018, stated that the usage of social networking sites is drastically increasing amongst the younger generation to communicate about alcohol. Moreover, numerous other studies have stated that the majority of adolescents and the Gen Z population (approximately 36%-96%) display alcohol-related pictures on Facebook. Such influence of digitalization prompts alcohol consumption, thereby aiding the market growth. Brands such as Pernod Ricard, Hennessy, Torres, Mc Dowell’s, and others use online websites to promote their products, thus enticing new consumers. For instance, in June 2022, Pernod Ricard announced the launch of its latest “digital label system,” which will inform the consumers about the purchased products as well as promote responsible drinking for a better future. The first pilot program will be launched in Europe before being rolled out globally across all the brands. Moreover, restaurants use these social media sites such as Facebook and Instagram to showcase their newly added drinks to the menus and happy hours’ scheme, thereby captivating a strong audience of every age group. Apart from this, the trend of online alcohol-oriented communities is also growing rapidly, where a group of people can digitally connect to socialize over alcoholic habits. For instance, a group on Facebook, “Take Me Drunk, I’m Home!” consists of 3,500 members who bond over their common interest in alcohol and smoking habits. Thus, the tremendous adaptability of technology in day-to-day lives further contributes to the overall market growth.

RESTRAINING FACTORS

Rising Trend for Low or Non-alcoholic Beverages to Restrict the Market Growth

Drinking habits have changed over time and the population is becoming more health-conscious after becoming aware of the repercussions of alcoholic spirits. Non-alcoholic beverages and Ready to Drink (RTD) cocktail mixers have gained the utmost popularity in the past few years and have managed to mark their presence amid the cognac and brandy market trends. According to a trade event, “Future Drinks Expo,” 2022, approximately one-third of the drinkers are maintaining moderation in their alcohol drinking habits with an aim for a better lifestyle. The growing awareness about the chronic illnesses of consuming alcohol has necessitated consumers to shift toward low or non-alcoholic beverages, without compromising on the taste and free from the adversities of alcohol consumption. For instance, in September 2020, Distell brand joined the ongoing trend of manufacturing “low alcohol spirits,” by launching “Viceroy Smooth Gold,” with 23% ABV content and the same flavor and smoothness. The company has reduced the usual alcohol content from 43% to 23%, thus paving new opportunities for developing such “low alcohol beverages” in the future. Moreover, the government is working toward lowering the alcohol content by producing beverages from crops and fruits other than foodgrains. For instance, in March 2022, the Kerala Government announced its plan to promote the state's agricultural and small-scale manufacturing sectors by manufacturing fruit or crop-based brandies. Moreover, the budget has been set aside for the next project meant for ethanol manufacturing with tapioca's help. Thus, all such initiatives and strategies further support the market's growth.

Besides this, developed countries levy heavy taxes on imported products which also inhibits the market. According to the “Toasts Not Tariffs Coalition” 2021, the U.S. started imposing 25% tariffs on cognac & brandy, valued above USD 38 per proof liter in connection to the WTO Boeing Airbus disputes. Such restrictions further impede the growth of the global cognac and other spirits markets.

SEGMENTATION

By Type Analysis 

Super Premium Beverages to Lead Due to High Demand Owing to its Fine Quality and Flavor 

On the basis of type, the market is segmented into value, premium, high-end premium, and super premium

In recent years, the global food and beverage industry has observed an uptick in demand for more “super quality” products. Premiumization includes growing attention to flavor, utilization of high-quality ingredients, and more appealing packaging motivating various manufacturers to develop luxury spirits. This continued growth of the segment is attributable to the rising demand of the millennials to try new premium drinks, growing earnings, and a surge in socialization further augments the growth momentum of the market. As per the British Newspaper, “The Guardian,” the sales of super-premium spirits grew by 20% in the year 2022.

The high-end premium segment is the fastest growing category attributed to the rising inclination toward premium liquors which is anticipated to augment the sales of cognac & brandy with “Very Special Old Pale” and “Special Old Pale” due to high demand.

By Distribution Channel Analysis 

On-Trade Channel to Dominate Due to Strong Consumer Preferences

On the basis of distribution channel, the market is segmented into on-trade and off-trade.

The on-trade segment includes restaurants, hotels, pubs, and bars. This segment witnessed the highest growth during the year 2021. Factors such as frequent outings with friends and families and rising peer pressure to socialize also boost growth. Nowadays, customers are mostly reliant on “on-premise” consuming outlets to fulfill their desired demand for food and beverages, thereby promoting the growth of the market through restaurants, bars, and hotels.  

The off-trade segment is projected to witness the fastest growth in the forecast period due to the rising number of retail stores, supermarkets, and other online options along with easy availability of products at one go, further supporting the market growth.

REGIONAL INSIGHTS

North America holds the largest cognac & brandy market share and was valued at USD 4.11 billion in 2021. Factors, such as dense population and rising demand for distilled spirits in the U.S. and Canada, boost the sales of these spirits. According to the Distilled Spirits Council of the United States (DISCUS), 2021, nearly 16.5 million 9 liter cases of brandy/cognac were sold across the U.S. markets. In addition, the surging demand for artisanal spirits and the increasing number of craft distilleries in the region are also contributing to the growing potential of the market. For instance, in September 2019, Copper & Kings American Brandy Co., unveiled its latest edition of American Craft Apple Brandy. The company expanded its product portfolio by adding a new line of apple brandy, which is aged in Kentucky bourbon and new American white oak barrels.

Asia Pacific is the second largest region with a strong share in the spirits market. A noticeable trend of the shift from whiskey and vodkas to brandy is being observed and the escalated popularity of cognac-based cocktails has contributed to the regional growth. According to the International magazine, “The Drinks Business,” in 2022, the sales of cognac rose by 56% whereas premium brandy sales increased by 31% in China. Moreover, the rising demand for locally produced brandies has also necessitated the companies to focus on such demands. For instance, in January 2021, Paul John Distillery developed a new brandy “Paul John XO Grape Brandy,” which is made from locally grown Indian grapes. Such innovations further add to the regional market share.

Europe is expected to witness a growth in sales of spirits owing to the rise in the number of food service chain outlets offering a variety of spirits, the spending power of customers and growth in the tourism industry. For instance, in September 2019, a new campaign, “Taste Destination Europe,” was launched by the European Transport and Tourism committee, to boost demand for spirits of tourism across the region. This online campaign promotes European spirits and distilleries across the region by attracting tourist’s attention. Over the past few years, the region is also experiencing a surge in demand for fruit-based brandies and cocktails, which also increases the scope of growth. Moreover, with the growing trend of a healthy lifestyle, consumers are seeking beverages made from natural botanical ingredients and fruit flavor blends.

South America and the Middle East & Africa are experiencing slower growth in terms of production as well as consumption. The willingness to try newly flavored alcoholic beverages amongst consumers and the growing influence of social media are further expected to drive the cognac & brandy market growth.  

KEY INDUSTRY PLAYERS

Key Players are Launching Innovative Products to Attract High Consumer Base

The market is highly consolidated due to the extensive production of spirits with the help of huge business stakeholders such as Remy Martin, Pernod Richard, and Hennessy LVMH. The cognac & brandy companies are focusing on new product developments via collaborations or partnerships, which will further help in diversifying their product portfolio and maintaining an edge in the market. In addition, the growing adoption of cocktail culture as well as increased usage in culinary arts further promotes the growth. For instance, in May 2019, Camus Cognac announced the launch of its Shanghai shake cocktail competition as an international challenge to celebrate the art of world’s top bartenders and their ability to create different twists of cognac-based cocktails.

LIST OF KEY COMPANIES PROFILED:

• Remy Martin (France)


• Hennessy LVMH (France)


• Pernod Ricard (France)


• Radico Khaitan Ltd. (India)


• Naud Spirts & Distillery (France)


• Emperador Distillers Inc (Philippines)


• Suntory (Japan)


• Meukow Cognac (France)


• Thomas Hine & Co. (France)


• Maison Ferrand (France)

KEY INDUSTRY DEVELOPMENTS:

• November 2022: Louis XIII and Leela Palace Delhi announced their first ever collaboration on a full meal cognac pairing. The cognac is served in a bell shaped crystal glass before which can be collectively enjoyed with the meal.  


• October 2022: Fortnum & Mason teamed up with the Frapin single-family estate for launching its own cognac “Hors d’ Age”. This new cognac is developed to be enjoyed neat or stemmed glass which can be paired with rich chocolate desserts or baked apple.


• September 2022: Tilaknagar Industries announced the launch of its new brandy, under its flagship brand, Mansion House. The Mansion House Reserve French Style Brandy is prepared from the “Ugni Blanc” grapes which are directly handpicked from the Sahyadris in India.


• July 2022: BEVCO outlet, a state-run firm in Kerala is offering a new type of brandy, “Malabar brandy” which will be produced at the Malabar distilleries in Palakkad district.


• April 2021: Mohan Brothers announced its new launch Burlington’s Very Old Pale reserve French grape brandy across the Indian market. The company also introduced other nine variants of brandy in the pipeline which are of different flavors.


• October 2019: The Bureau National Interprofessional du Cognac (BNIC) announced the launch of its new website which will suffice the evolving demands of the wider international audience. The website will also showcase the legislation as well as history of the cognac.

REPORT COVERAGES

The research report includes quantitative and qualitative insights into the market. It also offers a detailed analysis of the market size and growth rate for all possible market segments. Various key insights presented in the report are an overview of related markets, competitive landscape, recent industry developments such as mergers & acquisitions, the regulatory scenario in critical countries, and key industry trends.

Report Scope & Segmentation