The best gift to give during this month's Lunar New Year celebration in China was a bottle of fine cognac. China now accounts for 22% of cognac shipments worldwide, up from 5% in 2000. That's no surprise to Cyril Camus, president and owner of Camus Cognac Group, the world's fifth-largest cognac house. He's the latest Camus to lead the family business. All other major cognac brands are in the hands of conglomerates like Diageo and Pernod Ricard.
Mr. Camus moved to Beijing in 1994, and joined the family company in a marketing role in 1998. Since becoming president of the Camus Cognac Group in 2003, he has worked on distributing his brand in China, with flagship stores in key cities, and taking to international markets Chinese brands like Maotai, a variety of a strong white liquor called baijiu.
Building western spirits brands in China is costly and complicated. Luring consumers away from local beer, wine and, of course, baijiu, requires expensive education and sampling programs. Counterfeiters erode market share and brand value.
Mr. Camus recently spoke with "Thoughtful China," an online marketing-affairs talk show produced in Shanghai, about competing against the biggest brands in China. (See the full episode.
What percentage of sales does China represent for you?
For the overall cognac market now, China represents something near 35% of the volumes sold every year. For our company, it is still a little bit under that number, anywhere from a quarter to a third. That number is rising very quickly. We will try to stabilize that number to about a third of our total business, because I always thought it was a little bit unhealthy to rely too much on just one single market. But for a lot of cognac companies today, China has been really the key target. They would actually be shifting some of their production [and] some of their products away from other markets towards China. So we could see China one day physically becoming half of total cognac consumption in the world.
By volume, it is pretty much on par with the U.S. right now, but China is more of a premium market.
Will that affect global demand for cognac?
Cognac is a product with limited production capacity. It is a controlled appellation, it can only be produced in a certain part of France. There are quotas on how much can be produced and today, already the total cognac consumption around the world equals production capacity, so it is really a matter of deciding today if you sell more in China, where do you take those volumes from.
Does growing demand for whiskey make your job harder?
Whiskey is another one of those foreign spirits that help build a consumption habit that is more linked to western products and by default helps cognac as well. Our real competitors here are not so much whiskey or wine. It is domestic premium products, premium baijiu and so on, which still probably represents something like 98% of total alcohol consumption in China.
In two decades visiting China, what's the biggest change in your market?
Twenty years back, cognac was used purely as a way to display status, to show wealth and belonging to a certain business elite. Slowly, we have seen this evolve with the creation of two new types of clientele. One is the connoisseur who actually drinks cognac because he or she likes the taste of it. And there is a younger consumer who will drink cognac also for status but in a different environment, more in the bars, nightclubs and sometimes as a cocktail or on the rocks.
As a company, we focus really on the connoisseurs. But as an industry, I am always very happy to see my colleagues or competitors in the industry targeting the 25-to-35 year-old consumers, because they are effectively bringing my future consumers into the category.
How do you stretch your ad dollars?
You do not have that many independent family-owned companies. I think what we must do is basically live up to the personality of the brand, maintain the authenticity and the quality level of the brand which means there will always be a number of loyal followers of the brand.
Normandy Madden is senior VP-content development, Asia/Pacific at Thoughtful China, and Ad Age's former Asia Editor. See earlier episodes of Thoughtful China.