Wednesday, June 13, 2018

GRAFFITI STYLE DESIGN OF PACKAGING FOR NEW LIMITED EDITION VS BY HENNESSY COGNAC

Hennessy VS Limited Edition VHILs
Hennessy VS Limited Edition VHILs

This 9th edition of Hennessey V.S Limited Edition is the latest in Hennessy’s ongoing series of collaborations with internationally renowned artists. This is the first edition that includes an eye catching gift box that also showcases the talent of the Portuguese Graffiti Artist know as VHILs.

Hennessy VS Limited Edition VHILs
Hennessy VS Limited Edition VHILs

THE ARTIST
Portuguese visual artist, Vhils, is renowned for developing the unique aesthetic of removing layers from walls and other surfaces to expose what lies beneath. Considered groundbreaking in urban and contemporary art scenes, Vhils’ innovative portraits are chiseled into city landscapes around the world.
Hennessy VS Limited Edition VHILs
Hennessy VS Limited Edition VHILs

Source: Hennessy.com

Tuesday, June 12, 2018

EXPECTED GROWTH OF SHARES FOR REMY COINTREAU

Remy Cointreau logo
Remy Cointreau logo

Rémy Cointreau (RCO FP): Premium Growth but Premium Valuation
Source: Jefferies International Limited
Edward Mundy, ACA
June 11, 2018

Rating HOLD
Price Target $120.00 (from $105.00)
Price $122.90

Key Takeaway
We like Remy's category exposure (80% cognac) and see upside as the CEO rolls out her vision for the company as a super-premium business. Fundamentals in the Cognac Division remain strong which should support EBIT growth 12-13% in F19. While we like Remy, trading at 33.3x CY19E (vs staples 18.9x), the shares need upgrades to perform. Remain at HOLD.

Attractive category exposure... With 80% of the business cognac, rising further if other brown spirits Metaxa, St Remy, Mount Gay, Islay Spirits are included, Remy offers a highly attractive brown spirits portfolio that is well positioned to capitalise on the spirits premiumisation trend.
...with a vision as a super-premium business... Remy does not have the financial superpower to compete head-on with spirits majors. Instead, the business will borrow from the CEO's experience in luxury goods, relying more on digital and direct to consumer sales than traditional FMCG marketing.

Premiumisation strategy on-track - co is making good progress with the premiumisation model with 53% of the portfolio now over $50 a bottle vs 45% in F15. The move to 60%-65% over the next three to five years should be feasible given that 80% of sales are over $40. Given that it is unlikely that Cointreau can be sold for >$50 a bottle, the conversion of this 27% of the portfolio ($40-$50 a bottle) is likely to take place across cognac (1738), gin (Botanist), Mount Gay (xo) and higher variants of Metaxa.

Margin outlook - positive trends. Given the stronger than expected margin growth in F18, the company has raised its margin guidance to 240-300bps F18-20E. With 130bps captured in F18 (22.0%), this argues for between 50-85bps org margin expansion p.a. F19 and F20. Although the company is investing ahead of growth in A&P, margins should be driven by continued GM expansion given the company's premiumisation strategy.

What are the risks? Key risk for an investment in Remy is concentration risk in cognac & that consumers move away from cognac towards other brown spirits. However, we see an attractive outlook for the cognac industry with scarcity of inventory helping to drive a robust pricing environment.

What's changed? We increase F19 EPS c2% and our price target to $120 (from $105) to reflect the upgrade and the roll-forward of our DCF by one year.

Friday, June 8, 2018

86% OF REMY COINTREAU'S PROFITS COMES FROM COGNAC

cognacdailynews-remy-cointreau-logo
Remy Cointreau's profits boosted by China's thirst for cognac
Source:
https://www.rte.ie/
7 Jun 2018

Remy Cointreau has reported higher-than-expected annual profits, helped by strong demand for its premium cognacs in China, and predicted more earnings growth this year.
The maker of Remy Martin cognac and Cointreau liqueur said its strategy of selling higher-priced spirits to boost profit margins was delivering strong results.

Remy has been focusing on selling spirits priced at $50 a bottle or more, as part of a strategy that has benefited from a rebound in Chinese demand.
Remy's strategy has differed from that of rival Pernod Ricard, which has launched less expensive brands in China.

The private consumption of drinks and spirits has been recovering in China, offsetting the impact from the country's anti-corruption crackdown over the past few years which had hit sales of premium brand drinks.

Remy Martin cognac, which makes 86% of group profits, achieved a margin of 26.9% of sales, representing an organic increase of 1.3 percentage points.

Remy Cointreau's stock market valuation is closer to that of many luxury good stocks, rather than food and drinks stocks.

RECORD SALES PRICE FOR A WINE BOTTLE

cognacdailynews-auction-hammer-icon

A bottle of Vin Jaune, meaning literally ‘yellow wine’ in French, has sold for a record price of over €100,000 to a Canadian buyer.

One of the oldest bottles of wine in the world was sold on Saturday, 26 May, at an auction in France, for €103,700 ($121,000).

The exceptional longevity of the yellow wine of Arbois comes from its particular mode of elaboration, which consists of raising the wines “under veil”; that is to say, with a form of oxidation which transcends perfumes and limits ageing.

The wines have been lovingly cared for by eight generations of heirs of Pierre Vercel (1694-1754), whose family is known to have made wine in Arbois since the 14th century and whose Grand Commander has maintained the tradition. He had remained discreet about the number of bottles he had carefully preserved, and their location.

Source: Vinexpo-Newsroom

Thursday, June 7, 2018

CAN ANCIENT INGREDIENTS MAKE BETTER SPIRITS TODAY?

Heritage Corn Craft Whiskey’s Final Frontier?
Having tapped the bounty of heirloom grains, distillers are turning to the unexplored diversity of heritage corn to add nuance to their whiskeys.
JUNE 6, 2018 story: KARA NEWMAN

Once upon a time, nobody cared for whiskey being made with Rye, Corn or Wheat...
Now people are into details. What kind of corn?
Just a little over a century ago, hundreds of varieties of corn grew across the fields of the United States.

Today, almost all corn-based whiskey, including bourbon, is sourced from a single type of corn. But some craft distillers are trying to revive those ancient strains, creating spirits with greater nuance by stretching back to the past.

This sort of obsessiveness has become a feature of the craft whiskey movement. But even as producers increase their focus on the sourcing of grainslike ancient strains of rye, and even how they’re malted, corn remains the last frontier.
See, article Souce below for more details ...

That reminds me, that in 2015 I revived the concept of 1870 cognac by producing a cognac 'à la pre-phylloxera way' that is using single grape 'Folle Blanche', single cask, vintage and why not from Bons Bois with a higher proof which is looked down for no real reasons besides commercial reasons. I did not do high proof or cask strength because one as to go with baby steps. All of this was too much at once and it was wise to get a few great and 'good old' concepts first and later we will see!

Meet Comandon Cognac 2012 Single Cask Folle Blanche from Bons Bois 41.3% Alc/Vol.
Only 120 bottles were released in the USA and we sold them all to aficionados who were paying attention.
COMANDON VSC BB Folle Blanche 2012 #71 Box
Source: PUNCHComandon

COGNAC VINEYARDS PRICES ARE UP A LITTLE

Cognac Sales Image Logo Icon

French vineyard sales up 2.8% in 2017
Source:
https://www.vitisphere.com/
June 04 2018

The French market for vineyards is still buoyant with an increase in trade. Prices have risen irrespective of whether the vineyards are within an appellation area or not, or eligible to produce appellation brandies.

In 2017, the vineyard market was bullish with sales progressing well. A total 9,460 transactions (+2.8%) were finalised covering 16,900 ha (+7.9%) worth 1.3 billion euros (+59.9%). "Bought and sold acreage is at its highest level for the past 25 years," commented Loïc Jégouzo, from Terres d'Europe-Scafr, on 31 May in Paris at a press conference by the Safer network on land prices. The spectacular increase in values can be ascribed to the sale of several prestigious estates. "Ten transactions alone represent 31% of the total market value", said Jégouzo. But even if these transactions are excluded, value sales are still on the rise.
Champagne slowdown

From a price perspective, increases were posted across-the-board. In appellation or PDO vineyards, the average price is 143,900 euro/ha, a rise of 2.3% compared to 2016. "But if Champagne is excluded, the increase is much more marked: + 4.2% (Editor's note: at an average price of 69,300 euro /ha), because Champagne only rose by 0.8% in 2017", explained Jégouzo. All wine regions have progressed except Corsica. The highest increases were observed in Alsace (+7.2%), Burgundy (+4.9%), the Rhone Valley and Provence (+5.5%). "The most prestigious AOCs have continued to increase and are driving up the prices of intermediate AOCs," noted Jégouzo. The price of vines for appellation brandies has soared by 8.1% to 46,900 euro /ha. "The increase is due to record levels of Cognac exports", he said. The price of vineyards outside appellation areas increased by 3% to 13,800 euro /ha.

WINE WITH TRANSPRENT LABELS

Clinging Glasses

You Don't Really Know What's in Your Wine. These Winemakers Want to Change That.
Source: vinepair.com
Christine Clark
June 6, 2018

Most of us have a pretty good idea of how we're supposed to be eating - less sugar, more fiber, more good fats. Shop local, pay attention to labels, blah blah blah. We know the drill.
If you try to hold your wine to a similar standard of transparency, however, you'll end up frustrated. There's no requirement for winemakers to list their ingredients. Anywhere.
Unlike most of what we consume, wine is not regulated by the Food and Drug Administration, part of Health & Human Services. It falls under the purview of the Alcohol and Tobacco Tax and Trade Bureau, part of the U.S. Treasury. While winemakers do have to prove that their ingredients are safe, they don't have to list them. A winemaker can add sugar before or during fermentation in a process called chaptalization, potato protein isolate or polyvinyl-pyrrolidone (try saying that five times fast), or many others, and the consumer has no way of knowing.

That's where Donkey & Goat comes in. Pick up a bottle of anything made by this Northern California winery and you'll see an ingredients list that reads, "Hand-Harvested Grapes and Sulphur" or, sometimes, just "Hand-Harvested Grapes." Grab a bottle of wine made by almost anyone else, and look as hard as you want for its ingredients. You probably won't find them. Even a thorough internet search is bound to leave you empty-handed.

Donkey & Goat started labeling the ingredients on some 2014 wines after owner and winemaker Jared Brandt read that Ridge Vineyards in Cupertino, Calif. had started sharing theirs publicly. Brandt adopted the practice as "a way to explain our wines and be transparent," he says
Jared and Tracey Brandt of Donkey & Goat started labeling their 2014 wines.
The company describes itself as making "natural wines," complete with quotation marks. Its grapes are sustainably (and, in some cases, biodynamically) grown on Sierra Nevada, Mendocino, and Napa farms, and the only thing winemakers ever add in the cellar is sulfur, and even that is used minimally and sometimes not at all.

"Sulfur is complicated," Brandt says. Many consumers have a hazy idea that sulfites are added to wines, and that we're not supposed to be fans of that for some reason, but we don't really know why. Headaches, maybe? Off-tasting juice? Asthmatic fits? Whatever the outcome, it doesn't sound good.
Winemakers are legally required to inform consumers when their wines contain sulfites, though only when there's 10 milligrams or more per bottle.
"Wine is allowed to have 125 PPM [parts per million] sulfur for reds and 200 PPM for whites," Brandt says. This translates to 125 milligrams per liter for reds, and 200 milligrams per liter for whites. "Dried fruits can have between 500 and 2,000 PPM of sulfur," he says.

Donkey & Goat wines that do contain sulfur have 25 PPM. "Some books say sulfur is a byproduct of fermentation," Brandt says. "I don't think this is true. We have made wines that have zero detectable SO2." Donkey & Goat's Pet-Nat and Gigi wines contain zero sulfur.

"Many other winemakers add commercial yeast to try and get specific flavors," Brandt says. "Then they add DAP [diammonium phosphate] and yeast nutrients to make that yeast work better. Tannins to make it more tannic. Acid for balance. The list goes on." Some of the weirder ingredients wineries use include gum arabic, or acacia, to round out tannins, and "fish bladder for fining," Brandt says.
Ingredients labels, or the lack thereof, speak to the ways certain laws prioritize companies' marketability over consumer awareness.

"Many ingredients are not required by law to be listed in any product," Brandt says, "In fact, they qualify as 'production aids.'" Velcorin, for example, is an organic dimethyl dicarbonate (DMDC). It's a popular stabilizer used to quell yeasts and bacterial growth in juices, sports drinks, and wines. DMDC is becoming increasingly controversial, though. It's toxic for at least the first four hours after it's added to a liquid, Brandt says. Despite a scary-sounding list of potential hazards, including corrosive runoff and combustible vapors, companies are not legally required to disclose when they've added DMDC to their products to consumers.

"Producers are afraid consumers would care and thus have lobbied to have it as an exemption and not required to be labeled," Brandt says. "Who wants to buy 'fresh-squeezed orange juice' if that's in there, too - which I have been told is very common," he adds.

There's something comforting about knowing exactly what goes into your glass, for sure, but transparent labeling surpasses sentimental marketing, or touchy-feely hyphenates like "all-natural" or "farm-fresh." Food allergies, digestive disorders, and other health concerns are on the rise, both in terms of anecdotal awareness and medical diagnoses. As a result, many of us are scratching our heads and looking for ways to adjust diets and lifestyles.

Learning what's in everything we consume, be it a fast-food cheeseburger or Napa Valley Sauvignon Blanc, empowers us. We ask better questions of our doctors, our food providers, and ourselves.
And we especially appreciate those who give us the answers, free of charge, without our even having to ask.

Tuesday, June 5, 2018

EXPECTED COGNAC SHORTAGE IN 2019

Cognac Sales Image Logo Icon
Cognac Sales

Cognac shortage deepens as crops destroyed
Source:
http://www.drinksbulletin.com.au/
Alana House
June 04, 2018

A little more than six months after Hennessy announced "constrained" supplies of Cognac, the industry has been plunged into crisis following devastating hailstorms in France.
More than 10,000 hectares of vineyards were damaged in late May, as pebble-sized hail stones pelted the region. Around 14% of the brandy-producing vines of Cognac were affected, with many vineyard owners saying that they had lost all hope of harvesting any grapes.
The storm hit areas not affected by this type of weather damage for more than 40 years, with just under 1000 farms suffering the ravages of the hail.
The Bureau National Interprofessionnel du Cognac (BNIC) the Cognac interprofessional organisation that acts on behalf of all Cognac growers and firms of the region said in a statement on May 26: "Our vineyards were again hit by a violent episode of hail.
"In this difficult moment, the BNIC, its elected officials and its teams express their greatest support to the winegrowers of Charente-Maritime and Charente whose vines were destroyed or damaged.
"Our services are currently in the field to evaluate the precise impact of this episode on our vineyards."
The president of the General Union of Cognac Winemakers, Christophe Véral added that it had been a "catastrophe" and a crisis meeting was likely to take place.
Two years ago, the Cognac region was also hit by hail storms. The extent of the economic impact of poor weather in Cognac for three straight years is not yet known, but is expected to be crippling.
It comes as Cognac is having a millenial-fuelled revival.
BNIC reports that cognac's three largest markets are the United States (78.7 million bottles), Singapore (23.6 million bottles) and China (22.6 million bottles).
As a large proportion of Singapore's imports are shipped on to China, it's likely that China is now the world's largest market for cognac by revenue.
According to Reuters, Hennessy owns around half of the global Cognac market.
However, the category's booming growth was already under strain due to the lack of supply Hennessy has in reserve.
In January, the wine & spirits arm of LVMH, Moet Hennessy, announced a solid jump in 2017 sales, with strong volumes growth for Hennessy Cognac (+8%), which came despite supply constraints that Moet Hennessy said slowed growth in the second half of the year.
It said supply issues, which the company highlighted throughout last year, were likely to continue in 2018, with supplies remaining "relatively constrained".
Hennessy has been planting more vines, but new vineyards will take up to six years to start producing usable grapes - even Hennessy's youngest Cognac is aged between two and eight years.
It's expected the shortage will really begin to bite in late 2019 to early 2020. Experts are suggesting that Cognac lovers stock up on more expensive bottles of Hennessy, such as the V.S.O.P., the X.O. and Hennessy Black.

Friday, June 1, 2018

THE SENSISTIVE SUBJECT OF CRAFT SPIRITS AND CONTRACT DISTILLING

Big Data Logo
Big Data Logo

The Spirits Business talks about a very sensitive subject, they are brave!!

Distilling under contract is a mysterious, but vital, part of the spirits industry. The Spirits Business lifts the lid on the operations and strategies of leading third-party producers, and explains why many so-called craft brands wouldn't be without them.

The production stories behind hundreds - perhaps thousands - of small, independent spirit brands are often left untold. As the craft renaissance grips the industry, romantic narratives of heritage and provenance are positioned front and centre on spirit labels, while the large-scale companies that actually distil or source the liquid in the bottle stay in the shadows.

Industry members and consumers are now becoming more aware of third-party producers, but their emergence into the public consciousness hasn't exactly been smooth. In recent years, some brands that use contract distillers have come under fire for what has been seen as a lack of transparency. The criticism has stretched from gin to American whiskey and beyond, but whiskey producers from the US have borne the brunt of the backlash.

Undoubtedly, third-party producers and suppliers enable fledgling spirits to hasten their launch date and dedicate valuable resources to their brand and market strategies. But it's not only 'craft' brands that benefit from the service; international drinks groups will often purchase sourced spirits to increase and accelerate their production.
Third-party production is even more pervasive when one considers that it also includes neutral grain spirit (NGS), which is used as the base for countless brand leaders in the white spirits world.

The Spirits Business offers 5 examples of bulk suppliers.

1) MGP Ingredients(USA)
One of the most prominent third -party spirits manufacturers in the world is MGP Ingredients. The company was formed in 1941 as an industrial distiller for the war effort, before moving into beverage alcohol some years later. It now owns two distilleries: one that creates vodka, gin and industrial alcohol, which is based in Atchison, Kansas; and another that distils whiskey, based in Lawrenceburg, Indiana.

2) Sasma (Netherlands)
Sasma is a supplier of base spirits and ready- to- bottle products such as Scotch, Bourbon, cachaça and Tequila for the beverage- alcohol industry. Representing a further aspect of third -party spirits, Sasma does not distil, but instead acts solely as a supplier, sourcing liquid from distilleries, traders and agents.

3) Thames Distillery(UK)
Thames Distillery was founded 21 years ago, it is one of the best-known third -party distillers in the UK, and predominantly produces gin and vodka.

4) Creamy Creation(Netherlands & USA)
Established in 1979, Creamy Creation is the market leader in emulsified beverages, supplying mixable and ready made dairy, soy and coconut -based beverages to the international drinks industry.

5) Alcohols Limited(UK)
Alcohols Limited is the owner of Langley Distillery, a prominent UK gin manufacturer that has more than 300 partners around the world. It produces about 70m bottles for the global gin market annually. The business was established in 1805, while the distillery itself dates back more than 200 years, and has been distilling gin since the early 1900s.

There is even trade shows for this industry. For instance, IBWSS gives supermarkets, retailers, restaurants, wineries, distilleries and other buyers a premier international platform to source bulk wine and spirits and meet private label suppliers. The theme of the 2018 IBWSS San Francisco conferenceis “Bulk up your bottom line”. This is your opportunity to learn all about how you can unlock new opportunities in private label, bulk and contract manufacturing.

Things get more complicated when the bulk suppliers start making their own brands too, as one may wonder about the conflict of interests and competiting against your customers.

Source: The Spirits Business