Cognac performance in Asia ‘disappointing’

While Cognac exports have risen rapidly in Europe and North America in the three months to the end of July, the unsteadiness of the Asian market remains.

VS Cognac has been by far the best performing category this quarter (Photo: Wiki)

Global Cognac shipments increased 19.5% in in the second quarter of this year, according to BNIC figures. The standout performers were North America and Europe, which rocketed 26.6% and 12.7% respectively on the same period last year.

However, shipments in Asia decreased by 2.8% in July. While being unable to cancel out advances in the previous two months that helped account for a 15.6% overall quarterly growth, the drop is still a headache for producers looking for stability instead of monthly booms and busts.

By comparison, July shipments alone advanced 9.7% in North America, while shipments were up 18.4% in Europe.

Financial commentators agree that the steepness with which Cognac can still improve and decline in Asia on a month-to-month basis is a worry for investors.

“While the positive trends in North America seem to persist, the Asian performance is disappointing, especially after the rebound observed in the first part of the year”, analysts at Exane BNP said.

These figures are “modestly negative” for big Cognac producers like Rémy Cointreau and Pernod Ricard.

The two companies, along with other Cognac producers, have made it clear that their focus of late has been on the stabilised and growing Western markets of Europe and, predominantly, North America – both of which are redeveloping a taste for the spirit.

However, Cognac investors are keen that producers salvage as much as possible from the declining Asian market, which has consumed so much of the companies’ investment over recent years.

By category, premium XO underperformed in July, with shipments down 20.7% in July to drag down quarterly performance 7.5% growth on the same period last year.

The best performance was displayed by VS, with exports up 19.2% in July alone to account for 16.4% growth in the quarter. The category made up 50.7% of global shipments overall.

VSOP, which accounts for 38.8% of global shipments, increased 6.3% in July and an impressive 25.1% in the three months to 31 July.