The cognac market in China

In this article we are going to find the key factors of success for cognac brands in China.
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Status quo of China cognac market

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Cognac consumption is booming in China. Between 2009 and 2010, the market growth was  71% in China. China is now  the third largest importer of cognac after the United States and Singapore.
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The increase is so attractive that producers are not able to deal with the demand of premium cognacs (XO). Especially in the late 1990s, while Cognac was undergoing a crisis when China ordered a large number of aging XO.
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Cognac is regarded in China as a drink for celebration. It is also seen as a symbol of power in the business world. Cognac is mostly consumed in bars and  nightclubs.
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cognac-martel-privilege
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Cognac and the Chinese New Year

Cognac is a luxury gifts that the Chinese like to buy and give others as gift for the Chinese New Year.  This is a great opportunity for the cognac industry ! The turnover during Chinese New Year represents 30% of their annual turnover in China. Companies who want to share the cake seek to innovate in packaging and communication.
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martell-trunk-la-malle for chinese new year

martell-trunk-la-malle for Chinese New Year

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Consumers of cognac in China

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– The fuerdai (18-25 years): buy to show they belong to the international higher social class
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fuerdai
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– The Baofahu: new rich who will buy cognac in order to gain some  “face”
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Baofahu
– The Connoisseur (49 + years): consume for the taste of cognac
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connoisseur
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In general the Chinese consume mostly high quality cognac (XO) unlike the Anglo-Saxon  who drink mostly lower grades cognac (VS, VSOP). Imports of cognac XO (cognac with a brandy used in the assembly of at least 6 years of age) increased by 22% against the 8.6% for VSOP (aged less than 4 years of age) .
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The four major brands of Cognac distributed in China are:
  • Hennessy (LVMH)
  • Martell (Pernod Ricard)
  • Rémy Martin (Rémy Cointreau Group)
  • Camus
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Hennessy (LVMH):

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Hennessy Xo

Hennessy Xo

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The cognac brand of LVMH Group is a kind of Moët & Chandonwhen it comes to cognac. Its communication is quite the same with focus on glamour, strars and strass. The brand organised the Hennessy artistry awards which is a reality show aimed at creating a boys band. Many young talents competed. The TV show was surprisingly a tremendous success even if many other reality shows like this already existed.Hennessy artistry dedicated website:  
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Hennessy artistry website
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The TV show samples were also relied on Weibo:
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Hennessy artistry
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Hennessy Weibo

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Camus:

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To maintain the status as an international brand, Camus has chosen not to  include Chinese character on the packaging. However, in order to facilitate the readability of a foreign brand, Camus chose to add a logo known by Chinese as the “golden flower.”
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The colors of its packaging are red and gold which are two symbols of good fortune.
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Xo Camus
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The brand has played the “chinese card” and has chosen to use Chinese characters. In addition, to enhance the status of its product, it has fostered a co-branding partnership with a premium tobacco brand  namely “Chunghua”.  This operation gave birth to XO Chunghua cognac, which fits Chinese taste.
.Cobranding Chunghwa XO
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 .Rémy Martin:

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Remy Martin Xo
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When it comes to its distribution, most brands are present in bars, fashionable restaurants and KTV which are the places suited to its target customers.
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Concerning communication it seems that currently television is the medium that has the greatest influence. But since TV campaigns are expensive, many brands then turn to other solutions.
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First, it has increased its point-of-sale display in supermarkets, bars and hotels who are the best places cognac is consumed in China. By association with Chinese chefs, brand has chosen creative promotions around this topic.
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The brand also paid great attention to its packaging. Indeed, packaging is very important for cognac in China. The bottle is considered as a sign of wealth. Consumers of alcoholic beverages such as expensive Cognac pay attention to the value of ornaments bottles. It also responds to a pervasive culture of gift in China and in this context, the bottles can be kept on display in a showcase.
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cognac_chine
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Digital strategy of Rémy Martin:
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Remy Martin used a communication based on glamour and star. In 2012 Remy Martin was the official partner of the French cinema festival of Cannes.
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Remy Martin partnership with The French Festival  of Cannes
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Remy Martin has also chosen a good brand ambassador with  Jolin Tsai. She is a well known Taiwanese singer and actress and will fit for both Chinese and western consumers. A feminine red bottle was designed especially for her. This will be perfect for gift in China whose desgin appeals to rich girls very much.
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Jolin Tsai VSOP


Martell (Pernod Ricard):

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The new “Martell Cordon Bleu” became known through the topic of art. Luxurious displays and advertising campaigns in major airports in China were introduced.
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Since 2005, the brand strategy is to go upmarket. Thus, it has reshaped the image of “Martell XO” so that there is a link between tradition and tastes and lifestyles of today. Regarding the “Martell Noblige”, it is intended for businessmen who are successful and have a strong entrepreneurial spirit. A campaign called “Martell Only a few can tell” was launch in 2006 to create a privileged relation between consumers and the brand. The other objective of Pernod Ricard was to make Cordon Bleu the icon of the brand.
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Last but not least, in order to get closer to its customers, Martel created a Martel Business club: “Martell Elite Club.” It is now the best means of communication for the brand. This club allows to catch the attention of sophisticated consumers hardly accessible by using other means of communication.
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The first club was created in Shanghai. Today, there is another one in Guangzhou and one in Hong Kong.
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The concept of this club is to target cognac connoisseurs who appreciate the pleasure of modern life. Club members are between 30 and 50 years old and mainly private entrepreneurs, executives in large international companies and  some expatriates.
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Members regularly receive news from the company and are invited to tasting seminars or private parties. In addition, to reach more potential members, Martell has partnered with major banks and Chinese luxury department stores.
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The club can also order products Martell which are not on the domestic market and enjoy exclusivity. In addition, a close relationship is established with each member who is called the day of his birthday and receive a gift.
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The club contributes to the success of the company and 44% of the members buy more than two bottles per month.
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Martell Elite Club
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It should also be noted that the brand wishes to be part of a sustainable development  approach. This is a growing fashion in China where the elite like to speak of a need for an “harmonious development”. It has signed a partnership in 2005 with the RTSAC (Road Traffic Safety Association of China) in order to give an image of responsible firm as anti-drunk-driving. A slogan was created: “Do not drink and drive”, “do not drink if you are underage.” The brand also created the  website  nodrinkdrive.com to prevent road accident.
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Winner in China

Cognac is a great success in China because of the Chinese economic boom but also thanks to its image of French symbol of luxury. Finally, Cognac brands have managed to succeed in China through a marketing mix tailored to the Chinese market. These brands have kept their French values (product, price), but were good in adapting their communication and distribution to the Chinese market. They perfectly followed the motto: “think global, act local”.
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And you what do you thing ? Is this golden age of cognac in China going to last ?

Marketing Chine