Cognac’s Ethnic Division in the US: A Focus

Recent data compiled by North American market research provider Ipsos through its Alcohol Consumption Tracker highlights how the Cognac segment operates differently along ethnic lines in the US. Among black consumers, Cognac has been very popular historically, relying heavily on this ethnic group to drive much of its volume in the country. The situation has changed in recent years, however, as white consumers are becoming more engaged in the sector.

While Cognac has long been well-established in the US among black drinkers, who largely drink the spirit casually at home, white drinkers in the country are increasing their Cognac consumption – often through the on-premise channel and as an after-dinner digestif.

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Who

  • 30- to 49-year-olds drink the most Cognac, accounting for 57% of servings
  • Cognac skews male (78% of servings, 73% of monthly drinkers), and this skew has been growing in recent years
  • Cognac skews middle income, with households earning US$40,000 to $70,000 per year driving 36% of servings (compared to 26% for total spirits)
  • Black drinkers drive the majority of the Cognac market (55%); however, white drinkers have increased share from 26% to 40% in the past three years
  • For black drinkers, Cognac is a much more routine beverage, with 20% of servings consumed relaxing after work and 35% of servings consumed while watching TV (particularly sports programming, which drives 18% of servings). In contrast, white Cognac drinkers are more likely to reserve Cognac for meal times (13%) and special occasions (32%). As a result, white drinkers are more likely to encounter Cognac in the on-premise (36% of volume) compared to black drinkers (23% of volume)
  • 7% of black monthly beverage alcohol consumers drank Cognac in the past month, compared to just 1% of white monthly beverage alcohol consumers

What

  • About 54% of all Cognac in the US is consumed straight/neat/on the rocks; a proportion that has been relatively stable over the past few years
  • The number one mix for Cognac continues to be cola, accounting for 12% of Cognac consumption; this is much less than it was two years ago, however, when cola accounted for 24% of Cognac consumption. Instead, consumers are exploring new mixing options such as ginger ale

When

  • The Cognac occasion is shifting from the time when 37% of consumption happened in front of the TV (September 2013- August 2014) to one where only 21% of consumption occurs in front of the TV (September 2015-August 2016). The biggest decline has been when watching sport on TV, where servings have dropped from 18% to 9%. Instead, more consumption is moving to relaxing after work (13% to 23%) and special events (22% to 27%)
  • Similarly, drinking Cognac while snacking is down to 14% of the segment’s servings, from 19% two years earlier. This is likely due to less drinking while watching TV
  • Cognac has re-established its place as an after dinner drink in recent years, with the occasion now driving 20% of its volumes – up from 9% two years prior

Where

  • 17% of servings happen at someone else’s home, which is high, given that this figure is 10% for most spirits
  • Despite strength in the after-dinner occasion, there are only small volumes consumed at restaurants (9%) and upscale lounges (5%). More volumes flow through bars/pubs (21%) suggesting an opportunity to develop these more food-oriented channels

Cross-Category Interaction

  • Overall, Cognac consumers do not project segment loyalty. Cognac accounts for about 11% of monthly beverage alcohol consumption for regular Cognac drinkers – a ratio that has remained relatively stable for three years. In comparison, beer accounts for 35% of monthly beverage alcohol consumption by Cognac drinkers, while wine accounts for 17% of their monthly beverage alcohol consumption
  • As a result of this low average share of throat, Cognac producers need to focus on reaching a broader market to grow their volumes in the US.

These trends have been uncovered by the Alcohol Consumption Tracker (ACT), a consumer study that Ipsos has been operating in the US since early-2013. The project comprises an ongoing consumption diary that has captured the drinking habits of 50,000 US consumers since January 2013, across brands, categories, channels, occasions, and demographics.

For further details on the ACT, contact Ipsos VP John Mohler at john.mohler@ipsos.com.