Global Cognac & Brandy Insights

Global Cognac & Brandy Insights 2018 Edition IWSR 2011-2016 Data, 2017-2021 Forecasts

About this report We ve taken a fresh look at how to deliver spirits category insight. This reports series is focused on providing data with meaning, backed up with actionable insights. Discover the essentials for your business, and what will drive profit and growth. Gain the most important global strategic insight, and quickly. Grab the facts and use them - instantly. Use this report to gain a global view on the category with its: top-down world drivers of leading markets, consumers and product innovation; future category growth hotspots - visualised; top markets, brands, owners - ranked by volume and value; insider information from leading brand owners; Essential insight - in one quick-to-use package.

About our analysts Richard Woodard A trained newspaper journalist, Richard Woodard has been writing about the wine and spirits industries since 2000, including stints as editor of Wine & Spirit International, The Drinks Bulletin and The Spirits Business. He is a regular freelance contributor to a wide range of trade and consumer drinks magazines and websites, and has been writing regularly for just-drinks since 2006, including a monthly column on the international white spirits sector. Humphrey Serjeanston In his six years at the IWSR Humphrey has covered major markets in Europe, South America and the Middle East/North Africa, and currently looks after Italy, Greece, Turkey, Malta and Egypt. Prior to joining the IWSR Humphrey gained extensive experience in marketing and corporate communications in publishing and investment banking following a degree in French and Italian at Cambridge and a stage at the European Commission in Brussels. He is fluent in French, Italian and Spanish and in 2012 qualified for the Advanced WSET Level 3 award in wine and spirits. Alexander Smith Alex has been with the IWSR for 15 years and has reported from all corners of the globe. He has a wide contact base and deep understanding of the global markets having written about the alcohol industry for 24 years. Before joining the IWSR, Alex worked for Shanken International in London and New York and UPI on Capitol Hill.

4 Table of contents 01 Insights World view dashboard 1 Market conditions 2 Market key views 6 Future category prospects 11 Consumer drivers 21 Consumer key views 24 Product innovation 25 Product key views 28 Industry structure 29 Around the directors table 37 02 Indonesia 107 Philippines 113 India 119 Europe 126 United Kingdom 127 Germany 138 France 148 Bulgaria 154 Scandinavia 160 Norway 161 Finland 166 CIS 171 Russia 172 Ukraine 183 Africa & Middle East 189 South Africa 190 Sub-Saharan Africa Markets Nigeria 201 206 The Americas 39 Travel Retail United States 40 03 Mexico 51 Brazil 61 Chile 67 Asia-Pacific 74 China 75 Taiwan 83 Malaysia 89 Vietnam 95 Japan 101 200 Terms & Conditions Usage & copyright statements 218

5 List of tables & figures 01 02 Insights Markets Top 20 markets for Cognac, 2012-2016 ( 000s nine-litre cases, 12-16 % CAGR) 7 Cognac brands in United States, % share 2012 Top 20 markets for non-cognac brandy, 2012-2016 Cognac brands in United States, % share 2016 43 Cognac brands in United States, 2012-2016 ( 000s nine-litre cases) 44 ( 000s nine-litre cases, 12-16 % CAGR) 9 Top 20 Cognac markets forecast, 2017-2021 43 Top five Cognac owners in United States, 2012-2016, retail value ( 000s nine-litre cases, 17-21 % CAGR) 13 Top 20 fastest growing Cognac markets, 2017-2021 ( 000s nine-litre cases, 17-21 volume change) 15 Top 20 non-cognac brandy markets forecast, 2017-2021 ( 000s nine-litre cases, 17-21 % CAGR) 17 Top 20 fastest growing non-cognac brandy markets, 2017-2021 45 Cognac in United States by quality, 2012 and 2016 % share 46 Non-Cognac brandy brands in United States, % share 2012 47 Non-Cognac brandy brands in United States, % share 2016 47 Non-Cognac brandy brands in United States, 2012-2016 ( 000s nine-litre cases) ( 000s nine-litre cases, 17-21 volume change) 19 Top 20 global Cognac brands and owners retail values, 2012-2016 48 Top five non-cognac brandy owners in United States, 2012-2016, retail value 49 ( 000s US$, 12-16 CAGR) 33 Non-Cognac brandy in United States by quality, 2012 and 2016 % share 50 Top 10 global Cognac brands retail values, 2012-2016 ( 000s US$) 34 Cognac brands in Mexico, % share 2012 53 Top 20 global non-cognac brandy brands and owners retail values, 2012-2016 Cognac brands in Mexico, % share 2016 53 ( 000s US$, 12-16 CAGR) Cognac brands in Mexico, 2012-2016 ( 000s nine-litre cases) 54 35 Top 10 global non-cognac brandy brands retail values, 2012-2016 ( 000s US$) Top five Cognac owners in Mexico, 2012-2016, retail value 36 55 Cognac in Mexico by quality, 2012 and 2016 % share 56 Non-Cognac brandy brands in Mexico, % share 2012 57 Non-Cognac brandy brands in Mexico, % share 2016 57 Non-Cognac brandy brands in Mexico, 2012-2016 ( 000s nine-litre cases) 58 Top five non-cognac brandy owners in Mexico, 2012-2016, retail value 59

6 List of tables & figures Non-Cognac brandy in Mexico by quality, 2012 and 2016 % share 60 Top five Cognac owners in Malaysia, 2012-2016, retail value Non-Cognac brandy brands in Brazil, % share 2012 63 93 Non-Cognac brandy brands in Brazil, % share 2016 63 Cognac in Malaysia by quality, 2012 and 2016 % share 94 Non-Cognac brandy brands in Brazil, 2012-2016 ( 000s nine-litre cases) 64 Cognac brands in Vietnam, % share 2012 97 Cognac brands in Vietnam, % share 2016 97 98 Top five non-cognac brandy owners in Brazil, 2012-2016, retail value 65 Cognac brands in Vietnam, 2012-2016 ( 000s nine-litre cases) Non-Cognac brandy in Brazil by quality, 2012 and 2016 % share 66 Top five Cognac owners in Vietnam, 2012-2016, retail value Non-Cognac brandy brands in Chile, % share 2012 70 Non-Cognac brandy brands in Chile, % share 2016 70 Cognac in Vietnam by quality, 2012 and 2016 % share 100 Non-Cognac brandy brands in Chile, 2012-2016 ( 000s nine-litre cases) 71 Cognac brands in Japan, % share 2012 103 Cognac brands in Japan, % share 2016 103 104 Top five non-cognac brandy owners in Chile, 2012-2016, retail value 99 72 Cognac brands in Japan, 2012-2016 ( 000s nine-litre cases) Non-Cognac brandy in Chile by quality, 2012 and 2016 % share 73 Top five Cognac owners in Japan, 2012-2016, retail value Cognac brands in China, % share 2012 79 105 Cognac brands in China, % share 2016 79 Cognac in Japan by quality, 2012 and 2016 % share 106 Cognac brands in China, 2012-2016 ( 000s nine-litre cases) 80 Cognac brands in Indonesia, % share 2012 109 Cognac brands in Indonesia, % share 2016 109 110 Top five Cognac owners in China, 2012-2016, retail value 81 Cognac brands in Indonesia, 2012-2016 ( 000s nine-litre cases) Cognac in China by quality, 2012 and 2016 % share 82 Top five Cognac owners in Indonesia, 2012-2016, retail value Cognac brands in Taiwan, % share 2012 85 111 Cognac brands in Taiwan, % share 2016 85 Cognac in Indonesia by quality, 2012 and 2016 % share 112 Cognac brands in Taiwan, 2012-2016 ( 000s nine-litre cases) 86 Non-Cognac brandy brands in Philippines, % share 2012 115 Non-Cognac brandy brands in Philippines, % share 2016 115 Top five Cognac owners in Taiwan, 2012-2016, retail value 87 Non-Cognac brandy brands in Philippines, 2012-2016 ( 000s nine-litre cases) 116 Cognac in Taiwan by quality, 2012 and 2016 % share 88 Top five non-cognac brandy owners in Philippines, 2012-2016, retail value Cognac brands in Malaysia, % share 2012 91 117 Cognac brands in Malaysia, % share 2016 91 Non-Cognac brandy in Philippines by quality, 2012 and 2016 % share 118 Cognac brands in Malaysia, 2012-2016 ( 000s nine-litre cases) 92 Non-Cognac brandy brands in India, % share 2012 122 Non-Cognac brandy brands in India, % share 2016 122

7 List of tables & figures Non-Cognac brandy brands in India, 2012-2016 ( 000s nine-litre cases) 123 Top five non-cognac brandy owners in India, 2012-2016, retail value Cognac brands in France, % share 2012 150 Cognac brands in France, % share 2016 150 124 Cognac brands in France, 2012-2016 ( 000s nine-litre cases) Non-Cognac brandy in India by quality, 2012 and 2016 % share 125 Top five Cognac owners in France, 2012-2016, retail value Cognac brands in United Kingdom, % share 2012 130 Cognac brands in United Kingdom, % share 2016 130 Cognac in France by quality, 2012 and 2016 % share 153 Non-Cognac brandy brands in Bulgaria, % share 2012 156 Non-Cognac brandy brands in Bulgaria, % share 2016 156 132 Non-Cognac brandy brands in Bulgaria, 2012-2016 ( 000s nine-litre cases) 157 Cognac in United Kingdom by quality, 2012 and 2016 % share 133 Top five non-cognac brandy owners in Bulgaria, 2012-2016, retail value Non-Cognac brandy brands in United Kingdom, % share 2012 134 158 Non-Cognac brandy brands in United Kingdom, % share 2016 134 Non-Cognac brandy in Bulgaria by quality, 2012 and 2016 % share 159 Cognac brands in Norway, % share 2012 162 Cognac brands in United Kingdom, 2012-2016 ( 000s nine-litre cases) 131 Top five Cognac owners in United Kingdom, 2012-2016, retail value Non-Cognac brandy brands in United Kingdom, 2012-2016 ( 000s nine-litre cases) 152 Cognac brands in Norway, % share 2016 162 Top five non-cognac brandy owners in United Kingdom, 2012-2016, retail value Cognac brands in Norway, 2012-2016 ( 000s nine-litre cases) 163 136 Top five Cognac owners in Norway, 2012-2016, retail value Non-Cognac brandy in United Kingdom by quality, 2012 and 2016 % share 137 164 Cognac brands in Germany, % share 2012 140 Cognac in Norway by quality, 2012 and 2016 % share 165 Cognac brands in Germany, % share 2016 140 Cognac brands in Finland, % share 2012 167 141 Cognac brands in Finland, % share 2016 167 Cognac brands in Finland, 2012-2016 ( 000s nine-litre cases) 168 Cognac brands in Germany, 2012-2016 ( 000s nine-litre cases) 135 151 Top five Cognac owners in Germany, 2012-2016, retail value 142 Top five Cognac owners in Finland, 2012-2016, retail value Cognac in Germany by quality, 2012 and 2016 % share 143 169 Non-Cognac brandy brands in Germany, % share 2012 144 Cognac in Finland by quality, 2012 and 2016 % share 170 Non-Cognac brandy brands in Germany, % share 2016 144 Cognac brands in Russia, % share 2012 175 Non-Cognac brandy brands in Germany, 2012-2016 ( 000s nine-litre cases) 145 Cognac brands in Russia, % share 2016 175 Cognac brands in Russia, 2012-2016 ( 000s nine-litre cases) 176 Top five non-cognac brandy owners in Germany, 2012-2016, retail value 146 Top five Cognac owners in Russia, 2012-2016, retail value Non-Cognac brandy in Germany by quality, 2012 and 2016 % share 147 177

8 List of tables & figures Cognac in Russia by quality, 2012 and 2016 % share 178 Cognac brands in Nigeria, 2012-2016 ( 000s nine-litre cases) Non-Cognac brandy brands in Russia, % share 2012 179 Top five Cognac owners in Nigeria, 2012-2016, retail value Non-Cognac brandy brands in Russia, % share 2016 179 204 Non-Cognac brandy brands in Russia, 2012-2016 ( 000s nine-litre cases) 180 Cognac in Nigeria by quality, 2012 and 2016 % share 205 Cognac brands in travel retail, % share 2012 210 210 Top five non-cognac brandy owners in Russia, 2012-2016, retail value 203 181 Cognac brands in travel retail, % share 2016 Non-Cognac brandy in Russia by quality, 2012 and 2016 % share 182 Cognac brands in travel retail, 2012-2016 ( 000s nine-litre cases) Non-Cognac brandy brands in Ukraine, % share 2012 185 Top five Cognac owners in travel retail, 2012-2016, retail value Non-Cognac brandy brands in Ukraine, % share 2016 185 Non-Cognac brandy brands in Ukraine, 2012-2016 ( 000s nine-litre cases) 186 Cognac in travel retail by quality, 2012 and 2016 % share 213 Non-Cognac brandy brands in travel retail, % share 2012 214 214 Top five non-cognac brandy owners in Ukraine, 2012-2016, retail value 211 212 187 Non-Cognac brandy brands in travel retail, % share 2016 Non-Cognac brandy in Ukraine by quality, 2012 and 2016 % share 188 Non-Cognac brandy brands in travel retail, 2012-2016 ( 000s nine-litre cases) 215 Cognac brands in South Africa, % share 2012 192 Top five non-cognac brandy owners in travel retail, 2012-2016, retail value Cognac brands in South Africa, % share 2016 192 216 Cognac brands in South Africa, 2012-2016 ( 000s nine-litre cases) 193 Non-Cognac brandy in travel retail by quality, 2012 and 2016 % share 217 Top five Cognac owners in South Africa, 2012-2016, retail value 194 Cognac in South Africa by quality, 2012 and 2016 % share 195 Non-Cognac brandy brands in South Africa, % share 2012 196 Non-Cognac brandy brands in South Africa, % share 2016 196 Non-Cognac brandy brands in South Africa, 2012-2016 ( 000s nine-litre cases) 197 Top five non-cognac brandy owners in South Africa, 2012-2016, retail value 198 Non-Cognac brandy in South Africa by quality, 2012 and 2016 % share 199 Cognac brands in Nigeria, % share 2012 202 Cognac brands in Nigeria, % share 2016 202

Scandinavia Cognac is struggling in Norway. Formerly the country s biggest spirits category, Cognac is losing out to the popularity of whisky and continues to decline. Cognac lacks new consumers entering the category. The higher end of the market is performing a little better thanks to high brand awareness. In Finland, the top end of the Cognac market is faring surprisingly well thanks to premiumisation. Regional Cognac brands offer a lower price point, so up-trading from brandy is easier for consumers. Non-Cognac brandy is the cheaper alternative to Cognac and primarily competes on price. In Sweden, Cognac is suffering from the popularity of dark rums and whisky in the sipping occasion. Nordic Cognacs are stabilising thanks to the renewed interest in local products. Sipping brown spirits is a trendy form of consumption in Denmark. Cognac could benefit from this, as will the interest in high-quality spirits. The category could win over some rum consumers in the long run. Non-Cognac brandy is very small in the Nordics. The only noteworthy development is French brandy in Finland as it has been benefiting from downtrading from Cognac. All other brandy subcategories are very small.

Norway 01. Top Cognac brandy brands in Norway, 2012-2016 02. Top five Cognac brandy 1.02% owners CAGR in 11-15 Norway, 2012-2016 03. Cognac brandy in Norway by quality, 2012-2016

b+02+54682838 b+33+4678112233 Cognac brands in Norway, % share 2012 Cognac brands in Norway, % share 2016 Source: IWSR Source: IWSR BACHE GABRIELSEN COGNAC 33.2% BACHE GABRIELSEN COGNAC BRAASTAD COGNAC 24.4% 30.0% BRAASTAD COGNAC 19.5% DE LUZE COGNAC 7.3% DE LUZE COGNAC 10.1% THOR HEYERDAHL COGNAC 4.9% THOR HEYERDAHL COGNAC SOERLIE COGNAC 4.7% SOERLIE COGNAC 6.6% CH. DE MONTIFAUD COGNAC 3.1% CH. DE MONTIFAUD COGNAC 5.1% LARSEN COGNAC 3.2% LARSEN COGNAC 4.5% 7.1% HENNESSY COGNAC 2.1% HENNESSY COGNAC 3.0% NANSEN COGNAC 2.1% NANSEN COGNAC 3.0% SOLAN COGNAC 2.8% SOLAN COGNAC 0.0% 162

163 Cognac brands in Norway, 2012-2016 ( 000s nine-litre cases) Source: IWSR Brand 2012 2013 2014 2015 2016 Total 195.5 181.8 168.3 150.8 145.0 64.9 56.9 47.2 41.3 43.5 Braastad Cognac 47.7 42.5 34.3 30.1 28.3 De Luze Cognac 14.3 14.9 17.1 17.4 14.6 Thor Heyerdahl Cognac 9.6 9.2 10.3 10.0 10.4 Soerlie Cognac 9.2 7.3 7.3 9.8 9.5 Ch. de Montifaud Cognac 6.2 6.2 6.0 6.5 7.4 Larsen Cognac 8.7 8.7 6.5 5.6 4.6 Hennessy Cognac 4.2 4.3 5.6 5.0 4.4 Nansen Cognac 4.2 4.1 4.2 4.0 4.3 4.0 4.1 17.3 14.1 Bache Gabrielsen Cognac Solan Cognac Others 26.8 27.8 29.9

164 Top five Cognac owners in Norway, 2012-2016, retail value Source: IWSR Owner 2012 2013 2014 2015 2016 % share 12 % share 16 Total $112,614.8 $109,054.4 $108,904.9 $95,321.2 $94,792.5 100.0% 100.0% Bache Gabrielsen $34,344.3 $31,699.1 $28,782.7 $24,321.0 $26,136.5 30.5% 27.6% Tiffon $27,200.9 $26,541.4 $22,753.0 $19,034.5 $18,136.8 24.2% 19.1% Domaine Boinard $8,128.1 $8,520.6 $10,101.2 $10,602.9 $10,624.0 7.2% 11.2% Vallet Family $3,767.1 $4,049.7 $6,431.3 $7,358.2 $8,148.8 3.3% 8.6% Soerlie $5,592.0 $4,440.8 $5,870.3 $6,023.5 $6,027.5 5.0% 6.4% Others $33,582.4 $33,802.7 $34,966.3 $27,981.1 $25,718.9 29.8% 27.1% Top five Cognac owners in Norway, 2012-2016, retail value (000 s US$) Source: IWSR $40,000.0 $35,000.0 $30,000.0 $25,000.0 $20,000.0 $15,000.0 $10,000.0 $5,000.0 $0.0 2012 Bache Gabrielsen 2013 Tiffon 2014 Domaine Boinard 2015 Vallet Family 2016 Soerlie

165 Cognac in Norway by quality, 2012 and 2016 % share Source: IWSR Quality % share 12 % share 16 XXX / VS 73.5% 72.1% VSOP 25.6% 26.6% Intermediate 0.7% 1.0% XO 0.3% 0.3%