Kyle Jarrard

This was published about a year ago in the International Herald Tribune, but remains an accurate picture of the Russian presence in the Cognac business these days.

By Kyle Jarrard

COGNAC, France: Russia may be the land of vodka, but it’s an amber alcohol from France that has sparked a Cognac Rush in the land of hyper-rich oligarchs and aficionados.
And it’s not just the very well-to-do in Russia who are driving this phenomenon, it’s the newly moneyed middle layers of society as well. These days, no festive occasion is minus its eye-catching bottle of Cognac - crystal de rigueur and nestled in a fancy chest - the older and more expensive the better.
All of the Big Four Cognac houses are omnipresent in Russia. Hennessy leads the way by far, with Rémy Martin, Martell and Courvoisier battling it out for their share. In the thick of the fray are also many smaller houses, like Camus, Delamain and Otard, each with its top-notch Cognacs.
Russia is the world’s No. 7 market for Cognac, a rank it only recently achieved after a long climb up the ladder. About 5.3 million bottles went there in the year that ended in July, 49 percent more than the same period a year before. Three-quarters of that is older Cognacs and the rest, younger grades. In contrast to other markets, where entry-level Cognacs are rocketing, sales of aged grades are rising fastest in Russia.
“Russia is a country that has always loved its alcohol,” says Alain Philippe, director of Cognac’s oversight body, the BNIC. “So when you take that love for alcohol, mix it with a lot of purchasing power, you get a lot of people looking for high-quality products, and Cognac answers the call.” In his view, “there is no limit” to how much the market can grow.
Hennessy had its first sale in Russia in 1825, to a distributor in St. Petersburg. Since the end of the Soviet Union, its presence in Russia has expanded powerfully, with half the sales in Moscow, another portion in St. Petersburg and the rest spread across the country.
All of Hennessy’s grades have found solid niches in Russia. Bernard Peillon, the house’s president, says, “We’re working the top end of the market, focusing on businessmen and businesswomen, people with rising buying power. And as the Russian economy grows richer and Russians gain more and more buying power, there is going to be a tremendous geographic expansion of this market as well.”
Peillon notes that Hennessy is eager for Russia to enter the World Trade Organization because “barriers will fall, taxes will shrink and consumer prices will decline,” he said, adding, “Accessibility to our products will grow even easier, and we’ll be able to develop our brand quite rapidly.”
Hennessy, meanwhile, is going after a modern clientele, Peillon says, the new, sophisticated, highly educated consumer who covets fine products and carefully seeks out the best. “You only have to witness the tremendous thirst that Russians have for luxury products to know this is true - whether they’re in Russia or on the Riviera, skiing at Courchevel or dining in Paris,” he says.
Hennessy’s ultra-Cognac-dream is Beauté du Siècle, an ornate treasure chest with, among other luxury items, a Baccarat decanter containing a blend of Cognac whose oldest parts date from 1907. Only 100 are to be made and will sell for €150,000, or $220,000, with delivery by a Hennessy board member in person. More down to earth in Russia is Hennessy’s Ellipse, a €7,000 Baccarat decanter with an assembly of Cognacs dear to seven generations of Hennessy’s master blenders.
Rémy Martin also reports double-digit sales growth in Russia in recent years, making the house the “strong No. 2 in the market,” says Stephen Carroll, the house’s marketing director. “It is the super-rich in and around Moscow and also the emerging middle class in Moscow, St. Petersburg and in the regions who are really driving this market.”
“Cognac was very popular in czarist times,” Carroll says, “and Rémy Martin first imported Cognac into Russia back in the 1890s. Under the Soviet Union, brandy from Armenia and Georgia was very popular. But in the past few years, fueled by a rapid rise in real incomes, consumers have been trading up to imported Cognac. There’s a reverence for the true Cognac flavor.”
Rémy Martin’s two top-selling high-end Cognacs in Russia are its XO, largely Grande Champagne with a touch of Petite Champagne, which goes for €250, and the Louis XIII, which combines an incredible 1,200 Cognacs, some of which are a century old, and sells for about €2,000.
Martell’s high-end gem is Création Grand Extra, in a bottle shaped like a Roman arch. It is filled with Cognacs from the Borderies, for a fruity taste, and from Grande Champagne, for spiciness, and sells for €300.
Lionel Breton, chairman and chief executive, foresees widespread growth for Martell in Russia.
“This is a rapidly growing market to which we bring a whole range of Cognacs - from VS to XO to the very oldest types - and we’re well positioned. It’s a priority market for Martell. With our VS, we’re focusing on those drinkers eager to learn about Cognac. With the rest of our range, we appeal to people who have money, people who covet top-quality taste, who like our bottles and our international cachet.”
Courvoisier is consolidating its spot among top brands in Russia, with sales soaring 150 percent in four years. This year the house introduced a range of high-end Cognacs to the Russians, the better to position itself in a market where, it says, Cognac represents about a third of all imported spirits.
Most recently, Courvoisier debuted XO Impérial to promote “our deep historical ties with Napoleon I and our two centuries of rich history,” says Jennifer Szersnovicz, the brand’s public relations manager. The €220 Cognac is a blend of the top three Cognac growths that are several decades old. It is followed in age by Courvoisier’s Initiale Extra, from Grande Champagne and the Borderies, at €550; Succession J.S., in a limited edition of 2,500, which comes in a replica of a lockbox owned by Napoleon and sells for €3,000. The summit of the range is L’Esprit de Courvoisier, in a Lalique decanter, a blend of the oldest Cognacs the house possesses, for €5,000.
Camus vaunts one of the oldest relationships with Russia. Cyril Camus, its president, says, “We were the official supplier to the czar, then market leader during the Soviet era, and so today we have the privilege of having a client base that wants our kinds of Cognacs, ones that are rich in tradition, unique in style and based on five generations of know-how.”
Camus’s high-end offerings in Russia include its Vintages: single-year Cognacs selected from the period 1962 through 1989. One especially stands out, Le Pionneau 1969, which sells for €2,700. The house also offers its Jubilee (€2,000), Extra Élégance (€550) and XO Borderies (€335).
Delamain is a smaller player, but Russia is its No. 1 market. This Grande Champagne specialist has just produced the ultimate “Voyage,” a leather gift box with a Baccarat decanter of some of the house’s oldest Cognacs. Price: €7,500. About 175 of them have gone to clients in Russia.
Otard is going after the 30- to 50-year-olds, in Moscow mostly, with a wide range, from VS to 1795 Extra, priced from €60 to €575. Lhéraud and Meukow are two other important houses.