The Bureau National Interprofessionnel du Cognac (BNIC), the main industry group for the fortified wine from southwestern France, said earlier this week that sales of the drink slipped 6.7% by volume and 10.2% by value during the 12-month period ending July 2014. Exports to the Far East region, which includes Southeast Asia, China and Japan, fell by about one-fifth in the past year in both volume and value, the BNIC reported.
The industry group said the loss in the Far East region was directly related to a slowdown in the Chinese market, which was a large consumer of the more expensive bottles of the famed French eau de vie. China’s ongoing crackdown on corruption and excessive spending by government officials and state-owned company employees has cribbed spending on lavish entertaining – one reason some economists are predicting as much as a 1.5% dip in GDP growth this year.
The weak sales results are a stark contrast from two years ago, when China was the promised land for cognac makers. Sales hit a record high in 2012 in China when the country was knocking back the special brandy, clinking glasses at banquets and karaoke bars alike. Regarded as a status drink, many Chinese imbibers often sprung for the most expensive bottles and exchanged them as gifts. The world’s most expensive bottle was auctioned in Shanghai in 2011.
But the party has crashed. Owners of major cognac brands, such as Remy Cointreau SARCO.FR -0.74% (which owns Remy Martin cognac), reported a sobering 30% decline in sales during the last quarter of 2013.
Cognac is hardly the lone liquor getting caught in the corruption crackdown. Sales of baijiu, China’s notoriously fiery grain alcohol, and whisky are down, too.
China’s largest wine importer, ASC Fine Wines, said its sales stalled in 2013 as the anti-graft campaign drastically reduced sales of the most expensive bottles. Earlier this week, the company told the Journal it has since slashed the average price of its wines by 32% in a bid “to stimulate more demand for these wines through more attractive pricing.”
The Chinese are still drinking, they insist, just not splurging.