Asian thirst drives demand for 2,500-euro cognac
By Dominique Vidalon and Pascale Denis
COGNAC, France (Reuters) - So fine are the hand-made crystal decanters used for Remy Martin's 2,500-euro Louis XIII cognac that workers don silk gloves to fill them with the caramel-colored liquor, to avoid leaving scratches or smudgy fingerprints.
It is the finishing touch for a deluxe elixir made from a blend of 1,200 kinds of "eau de vie" brandy aged for decades in century-old oak casks cloaked in a black fungus that feeds on the "angels' share" of alcohol evaporating through the wood.
As overall cognac sales have recovered from the 2008/09 downturn, discerning Chinese looking for an aspirational tipple are causing a surge in shipments of Louis XIII and other deluxe spirits.
The trend is good news for Remy Martin, which is much more focused than its rivals on high-end brands, and suggests that a slowdown in China's overall economic growth rate may not dampen the country's appetite for some luxury goods, even if some sectors have sounded warnings.
"The very high end is doing very well and is growing in Asia and all our markets. There is a very strong appetite in Asia for recognized quality," Remy Martin Chief Executive Patrick Piana told Reuters in an interview.
Robust demand for pricey brandies is encouraging parent group Remy Cointreau despite a sharp slowdown in sales growth in the last three months as Asian wholesalers use up stocks built up earlier in the year.
High-end brands were the fastest-growing category of cognac sold in 2011 in volume terms, growing 18.2 percent for XO, or "Extra Old", blends where the youngest eau de vie in the mix has been aged for at least six years.
Rising deluxe sales led to a 16.9 percent jump in the retail value of global cognac shipments in 2011 to $8.5 billion, as volumes rose a lesser 6.5 percent to 12.2 million 9-bottle cases, according to International Wine and Spirits Research. Continued...