June 21, 2024

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Post-pandemic party’s over as Americans shun cognac

2 min read

When New York’s nightlife reopened as pandemic lockdowns eased, partygoers wanted to drink one thing: cognac. “Everybody was ordering excessive amounts of bottles . . . at one point there was a shortage of Henny,” said club promoter Frankie Banks, referring to LVMH’s Hennessy brand cognac.

But the party is now over. After a three-year boom, US demand for cognac has slumped, with the French groups that dominate the market — LVMH, Rémy Cointreau and Pernod Ricard — each reporting declining sales in their third-quarter earnings. The trend matches a slowdown in the broader market for luxury goods.

Premium alcohol sales rocketed during Covid lockdowns as bored consumers stuck at home with extra savings splashed out on pricier spirits. This continued as bars reopened.

But drinkers are now dialling back on spending amid worries about the economic outlook with aspirational spirit brands becoming one of the first luxury categories to moderate. 

“We are crossing into territory where the savings are gone, the support is gone,” said Spiros Malandrakis, spirits analyst at Euromonitor. “It looks like a hangover after the great party that followed the pandemic recovery.”

Export volumes of cognac, a brandy produced from white wine grapes in western France, fell 18.9 per cent between August 2022 and the end of July this year, according to the cognac producer’s association UGVC.

The US is by far the largest consumer of cognac, importing more than half of bottles produced, according to the Bureau National Interprofessionnel du Cognac (BNIC).

Rare and old cognac is stored in Hennessy’s factory in Cognac, southwestern France. Export volumes of cognac fell 18.9% between August 2022 and the end of July this year © Regis Duvignau/Reuters

Half of all cognac in the US is drunk by African Americans, a demographic that has been disproportionately affected by the cost of living crisis, according to analysis by Bernstein.

The skew to African American consumers is…

2023-11-04 01:00:48

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