Beyond The Snifter.

Cognac and brandy have a bright future... and it's filled with ginger ale, fruit juice and increased sales.

The martini, or at least the martini glass, has probably done as much for cognac and brandy as for vodka.

When the "Hennessy Martini" was introduced several years ago, it marked the beginning of a viable and sustainable mixability trend among mainstream consumers that continues to demonstrate wide appeal and accounts for much of the category's recent growth. The success of the Hennessy Martini led directly to more ambitious efforts by a number of marketers to promote a variety of cognac-based mixed drinks.

Today, cognac marketers and brandy producers are counting on soft drinks, fruit juices and other mixers to help drive the category's consumption to new heights, Of course, mixing cognac with cola, as well as other sodas and juices, has long been popular in the African-American market, a vital segment for Hennessy and other leading brands. What is new is that this form of "non-traditional consumption" is finding increasing favor with a broad spectrum of mainstream consumers as well.

So while top producers showcase their finest marques and create distinguished blends with their aged reserves, an ocean of cognac and brandy is being swilled not in snifters, but in tumblers filled with fun, fizzy, fruity concoctions sometimes sipped through straws.

"Consumption in the past has been more for cigar bars -- neat in a snifter or on the rocks," says Jamie Prusak, vice president, group product director, Schieffelin & Somerest. "Now we're branching out and making ourselves more lounge appropriate with more mixed cocktails." The fruit of these efforts can be seen, for example in the New York market where Hennessy sales had lagged the rest of the country. A year after the contemporary mixed drink campaign, supported by extensive advertising, was launched in New York, it became Hennessy's top performing market. "It's still a sip-and-appreciate kind of drink," notes Prusak, "but now there's flexibility to appreciate it in different ways; and it does distinguish a consumer in a bar situation."

While traditional cognac consumption among older consumers remains vital, and is being bolstered by a strong economy, there is an increasing focus on recruiting new drinkers to the category. "The larger opportunity is in non-traditional usage of cognac," explains Matt Wiant, vice president of marketing for classic spirits at Allied Domecq. "Younger people are drinking cognac now, but not in a snifter. It's becoming popular as a mixed drink. It's a very easy brown spirit to start drinking and that's where the future of the category lies."

Wiant observes that most of the category's growth is at the entry level, particularly the VS and VSOP marques. "We see it as a growth category for the next 10 or 15 years. At Courvoisier, our next opportunity is to leverage our great image and make it more of an everyday drink among urban and younger consumers."

An advertising campaign introduced last year ("The State of Courvoisier") has been successful in injecting a measure of fun and intrigue into the brand. Over the next few months the campaign will continue to evolve with new creative executions. "We are interested in re-energizing the brand by bringing in younger drinkers and making it fun and mixable, and we will focus some of our efforts against the urban market," says Wiant.

Also looking to leverage the mixability element is Remy Amerique, which recently introduced Remy Martin VS Grand Grus. Positioned as a lively, smooth spirit with fruit and light oak aromas, Grand Crus is recommended as a mixing cognac and is made entirely from grapes grown in the Petite Champagne area of the cognac region.

Meanwhile, in the brandy segment, an enormously successful repackaging and repositioning effort is paying off handsomely for Paul Masson Grande Amber. The upgrade has helped redefine the brand and has resulted in a remarkable 73% increase in sales since 1996. Last year, Paul Masson was up 22% to 780,000 cases while larger competitors such as E&J was down more than 7% and Christian Brothers dropped 3%. In fact, the performance of Paul Masson has earned it a prestigious "Growth Brand Award" for several successive years from Adams Media as well as sparking renewed interest in the category.

This past spring, Christian Brothers Brandy, the category's second best-seller, was purchased by Heaven Hill Distilleries which is currently developing a new positioning and advertising strategy for the brand that will be rolled out in 2000, Heaven Hill also markets Coronet, J. Bavet and Aristocrat brandies and accounts for more than 17% of total category volume.

"You've seen a lot of declines in the price brands," says Susan Overton, marketing director at Heaven Hill, "but we've done well with our brands that offer quality. Consumers are more discriminating -- lots of times consumers are drinking less but better but consumers are also looking for value and the quality that's delivered -- and that's why you see strength in certain brands in the category." In light of this, new packaging, promotions and a "strong value-alternative positioning" will also be introduced next February for Coronet.

Line extensions are another avenue for growth that Heaven Hill is exploring. For example, it is bringing back Christian Brothers Holiday Nog for the all-important holiday selling season. And it is capitalizing on the mixability trend with its Frost White Brandy that is targeted to consumers who like to mix. "And that takes you into a whole new market" that skews female, notes Overton. For consumers looking to trade up to "a more cognac-style brandy," Heaven Hill will be promoting its cork-finished Christian Brothers VSOP Grand Reserve, which is priced above E&J and Christian Brothers base brand, the amber,

A vibrant economy is boosting the fortunes of brandy and cognac. Aging baby boomers and a cocktail culture are contributing to the increase in sales. And with new advertising and promotion initiatives, leading brands are successfully appealing to new and younger drinkers by broadening usage opportunities and promoting mixed drink recipes. And the best is yet to come. As Susan Overton says, "We think there's even more opportunity to capitalize on and build."

1 Part Cognac, 2 Parts Blasphemy...

Although it may offend connoisseurs, mixability is here to stay and marketers are increasingly promoting their own unique ways of consuming cognac. Here are two such recipes:

Courvoisier Millennium Cocktail

1 1/2 oz. Courvoisier Millennium cognac

1 1/2 oz. pineapple juice

1 1/4 oz. Hiram Walker Orange Curacao

2 dashes bitters

Mix in large shaker. Serve up or on the rocks.

Hennessy Continental

1 oz. Hennessy

1 1/2 oz. cranberry juice 

1/2 oz. grapefruit juice

splash of Grand Marnier 

Into a chilled martini glass add ice, mix ingredients and stir.

Timeless Millennium Spirit.

Courvoisier is introducing an exceptionally rare cognac blend, L'Esprit de Courvoisier, developed from the company's vaults of precious cognacs, some dating back to the French Revolution in the 1780s. Developed to reflect Courvoisier's tradition of cognac making over the past two centuries and to celebrate the new millennium, L'Esprit will be launched in January 2000 and is expected to retail for up to $6,000 per Lalique crystal decanter.

For less well-heeled customers, there's a special blend to celebrate the Millennium and it's available now -- Courvoisier Millennium, with a typical retail price in the $50 range.

Hennessy also has a Millennium-inspired limited-edition cognac called, Timeless. With a suggested retail price of $5,000, Timeless is a blend of 11 eaux-de-vie dating back to 1900 and bottled in a specially designed and numbered Baccarat crystal decanter.

Cognac & Brandy Snapshot

A roundup of some of the key dynamics in the cognac and brandy business:

* Consumption Total brandy/cognac consumption increased 3.4% last year to 8 million cases and is up 21% since 1994.

* Advertising Spending was up 75% to $14.5 million last year and will likely increase again in 2000. Why? Because it's helping to drive consumption to new heights.

* Mixability It's real and it's drawing new drinkers. "Sophisticated cocktails" are hot, snifters are not.

* Young and Urban Marketing efforts are focused on recruitment of younger and more urban males and females.

* African-Americans Continue as a core consumer group for the category. Brandy/cognac consumption skews strongly black.

* Packaging and Positioning Product quality is important, but upscale packaging and positioning are more important.

* Asian Crisis Last year's news, but higher marques still suffering worldwide.