Torula'zette 12

Musical Chairs random, as we hear them:

Some see the signs, some hear the voices; both point South to the Bordeaux wine industry. Anne Blois left Marie Brizard/Cognac Gautier for wine industry, as did Philippe Tapie of L&L. Laurent Berriat moved from LINEA Angouleme to DDH in Bordeaux.

Christophe Navarre moved up and north from President of Hennessy Cognac to President wine & spirits group at LVMH.

Philippe Preval left Cognac Prunier for KCP Hardy where he is looking after their brandy business.

Philippe Gelas of the famous Armagnac family took over as General Manager at Cognac J. Dupont in Grande Champagne.

Serge Arrou sold his beloved La Cognatheque in Cognac, which he founded in 1978, and decided to retire. Jacques Denis and his wife bought La Cognatheque in Cognac.

Michael Beamish ended a long family association with Hennessy when he moved to Gallo Asia in Tokyo.

Antoine Cuzange retired from Cognac Camus and Cognac Staub.

Alain Brastaad retired from Cognac Delamain.

Jean Paul Camus stepped aside at Cognac Camus.

Drop us an e-mail about further going ons, we will check it and publish it. cognac@msn.com

Editorial

Since September 1996 we have operated www.swfrance.com and www.cognacnet.com. This Internet presence is all about information on Cognac, Armagnac, Pineau des Charentes, Brandy and Vin de Pays Charentais. We are independent and our only interest is to deliver accurate and timely information. The only thing that we sell online are books related to Cognac. Three years ago we started a daily Torula News because there is no such news service about Cognac. But news are news; short and to the point. So today, we begin publishing Torula'zette, a quarterly newsletter about Cognac and brandy. As with Torula News, we hope that the Torula'zette will be opinionated, provocative and accurate. And, of course, independent! Its main mission is to inform and comment.

Cognac is a cyclical industry. Nearly 93% of its production is exported. Number 1 importing country is the USA. When the global and Cognac importing country economies stop growing, the Cognac industry suffers. Asian crisis of a few years ago is just one example. Another example was elimination of duty free sales in EC. Today, everyone is watching USA. When Japan, the 5th largest market, recently stopped buying Cognac (their imports dropped 32% in 1999) it still has not recovered despite valiant effort of the Big Four. UK and Germany markets, number 2 and 4 respectively, have been sliding for a number of years. Only Norway and Finland show steady progress over the past few years. The image of Cognac is one of a luxury product. The industry has tried a difficult balancing act of maintaining this image on one hand and on the other by introducing products like Pure White, Rémy Red, Diva, Alizé and Rémy Silver. And then there is BNIC (The Cognac Association) and their relentless campaign of CognacTonic and an obsessive putting down of whisky.

The Big Four are effectively Big One, Hennessy Cognac and Big Others (Martell, Rémy Martin and Courvoisier). They account for about 75% of total production. Hennessy is owned by LVMH, Martell by Pernod-Ricard, Rémy Martin by Rémy Cointreau and Courvoisier belongs to Allied Domecq. Their mission is to grow market share by taking advantage of their parents distribution networks, improve their financials by driving prices up and keeping their products quality. While Hennessy has divested of brandy business, the others keep striving at it. The Big Four have resources to invest in marketing and advertising but only Hennessy and Courvoisier does this effectively. Until very recently, all Big Four producers sold blends only. Then Hennessy introduced XO Grande Champagne (one of their best products), Rémy Martin changed their VS to VS Petite Champagne and Martell resurrected their Borderies product (which turned out to be one of their best).

Among the next tier of producers, Cognac Camus, the only large scale family owned Cognac business is trying to keep up by concentrating their marketing and advertising activities in specific countries (i.e. UK).

So, what is a consumer making out of it? The consumer keeps buying it at a steady growth rate of about 5% on a year to year basis. But the consumer is confused; product labels are fuzzy, vintages and product age definition need a lawyer to interpret them, macho product vs. feminine silliness, how and when to drink it advice comes from everyone and it is not focussed.

A number of events took place in the industry over the past 3 years; Bernard Guionnet was elected President of BNIC, a first viticulteur/distiller to do so, Christophe Navarre became a President of Hennessy, Patrick Martell retired from Martell as did Jean-Paul Camus from Camus. There was hope, there was optimism. continues Editorial page 11