Cognac – Where to now?
It may be overstating things to suggest that cognac is undergoing an existential crisis at the moment, but the category has arguably been the biggest loser amid the post-pandemic lull in demand for beverage alcohol.
All luxury spirits have been impacted, as IWSR’s analysis of status spirits (those priced above US$100 per bottle) illustrates: total value down 8% in 2024, equating to a decline of almost US$1bn. Indeed, using the same measure, high-end cognac plummeted by 14% last year, largely thanks to China, where the segment was hit by a toxic mix of an anti-dumping investigation, the closure of the domestic global travel retail channel and a renewed crackdown on ‘extravagance’ among public officials.
In 2019, according to IWSR, cognac accounted for more than half of global status spirits’ value; by last year, the share had slipped to 36%, placing it behind scotch at 38%. Throw in the continued softness of the US market and the global picture is dismal.
Where does cognac go from here? A more diverse market mix would help – the industry can possibly afford a downturn in either the US or China, but not both – and a renewed focus on innovation and NPD simply to get the category back on drinkers’ radar would also assist.
Many companies in the region are doing great work at communicating cognac’s heritage, authenticity and provenance – names such as Delamain, Frapin, Hine, Camus and Ferrand spring to mind, and there are more – but it’s hard to escape the feeling that the biggest brands have only recently awoken from a complacent torpor, realising rather late that you can’t just rely on traditional lines of VS, VSOP, XO and XXO to survive and thrive in today’s drinks market.
Whiskey/whisky – Shaking up the status quo
One episode from April this year sums up the complex nature of today’s whiskey/whisky market: as Pernod Ricard-owned Irish Distillers unveiled the sixth and final chapter in the Midleton Very Rare Silent Distillery Collection – a EUR60,000 (US$69,600), 50-year-old single pot still whiskey (above) – the many stills at the unit’s ‘new’ Midleton distillery were silent (albeit temporarily) as production was paused in tune with a fall-off in demand.
Midleton was not alone. Brown-Forman’s revived Glenglassaugh malt distillery is silent once more; Diageo has paused distillation in the US and malting barley production at Roseisle in Scotland; the newly consolidated InchDairnie Whisky in Fife is mulling redundancies; and Eden Mill down the road has recently been rescued from administration.
If there’s a common factor at play, it’s the slowdown in the US, by far the largest market for scotch, Irish and home-grown American whiskey, although other markets – most notably China – also have their difficulties.
Scotch is pinning a lot of its hopes on the huge promise of India, where duties are set to be slashed by the UK-India free trade agreement, but the sector will face stiff competition in the country from all quarters. Indian single malt – increasingly present and focused on quality – already outsells scotch malt in the market, and Jameson is the country’s biggest BIO (bottled in origin) spirits brand.
In other words, opportunities exist – but it will take resources and ingenuity to fully exploit them.
Champagne and sparkling wine – Luxury democratised
At a difficult time for the global wine industry, sparkling wine offers a much-needed bright spot. Once confined to celebrations and special occasions, the category is now increasingly democratised, with younger consumers seeing it as an everyday treat, reinforced by its centrality to the booming spritz serve.
Challenges remain – sparkling wine must endure the same tough market conditions as everyone else – but it continues to outperform the languishing still wine category, which appears to be mired in long-term structural decline.
Prosecco has been the big success story of the past decade. It continues to see robust growth in key markets, such as the US and France, but appears to have peaked in the UK. Alternatives – crémant in the UK and France, English sparkling in the UK, flavoured sparkling in the US – are emerging to quench the thirst for exploration among younger Millennial and Gen Z consumers.
Coupled with macroeconomic difficulties, the democratisation of what was previously an affordable luxury has been bad news for champagne. Losses across key markets – especially France, still by far the category’s largest destination – have persisted as consumers resist the sharp price rises of the past few years.
The situation reinforces the belief that champagne’s future should be moored to value, not volume.
Aperitifs – Hitting the sweet spot
Light, refreshing and informal, and suited to low-energy, early evening consumption occasions, aperitifs – spearheaded by the near-ubiquitous spritz serve – seem to be satisfying the demands of modern consumers more than any other alcohol category right now.
In its modern guise, the aperitivo moment was kickstarted by two Italian icons: prosecco and Aperol. Ten years ago, 75% of the latter’s sales were confined to Italy and Germany; today, that same share is spread across Italy, Germany, Austria, France, the US and the UK, with the US now the third-largest destination.
That kind of success is bound to breed copycats. As the spritz has spread geographically, it has also diversified and morphed into many different forms, incorporating everything from limoncello to amari, bitters and soft drinks – even a high-end clear ‘whisky’, Crystalgold (above), debuted by Pernod Ricard-owned Chivas Brothers in September. Some businesses, such as Spain’s Zamora Co, have set up dedicated spritz teams to exploit the opportunity.
The occasion is also increasingly vital to the fortunes of sparkling wine brand owners, and prosecco companies in particular. We should expect more diversification during 2026, then, not to mention the continued growth of RTS/RTD and no/low products at the intersection of three hugely influential trends.
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