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Shelf analysis

Eau-de-vie, or the water of life, has long been revered for its health-giving properties, but in a generally declining sector, it looks as if brandies such as Armagnac and Calvados could now do with some life breathed back into them. Armagnac is a grape spirit produced in south-west France, with production pre-dating that of its more famous neighbour, Cognac. But while Cognac established itself in the UK market many years ago, Armagnac made a relatively recent appearance due to transportation problems from this inland area. It has never attained the popularity of Cognac and is now in very gradual decline with only 0.2% of the total UK spirits market at 3,000hl (AC Nielsen). Calvados, an apple brandy from Normandy and Brittany in Northern France, has a similar tale to tell, with UK imports falling from about 4,000hl in the mid-90s to below 3,000hl in recent years (AC Nielsen). Even its use in cooking and the rise of the area as a British holiday destination have failed to take it out of its niche market. Both spirits have had trouble gaining greater shelf space in the major retailers, as acknowledged by Neil Mathieson, managing director of one of the UK's main Calvados and Armagnac importers, Eaux de Vie: "It's difficult for them to get listings in multiples. As the centimetres given to brown spirits are on the decrease, coming in with a minority product which isn't an advertised brand is very hard. They want something that will sell, rather than has to be sold." Despite this, the situation appears to be relatively stable, as Mathieson added: "However, we haven't lost any listings for years. It's a kind of stasis."

Lack of support

Exports count for about 45% of total Armagnac production. Considering that the UK is Armagnac's main market, which is hardly in rude health, it appears an odd move that the Bureau National Interprofessionnel de l'Armagnac (BNIA) withdrew generic support in the UK several years ago. The new director of the BNIA, Sbastien Lacroix, explained that the reason for this was due to the setting-up of a series of Armagnac "clubs d'enterprise". These associations are made up of groups of producers who have joined together to develop sales in various markets. To date areas covered include the Internet, and the Chinese and French markets. One is planned for the UK. The situation is similar if slightly worse for Calvados, whose last generic campaign was five years ago. Advertising manager for the Bureau Interprofessionnel du Calvados, Jean-Franois Martin, explained: "We are now concentrating on three-year campaigns for specific countries. These are currently Germany and Belgium, which have a campaign running until 2001. There are no plans at present for one in the UK." Given that the UK makes up only 4% of Calvados's export market, with Germany, Belgium and Switzerland of far greater importance, this lack of generic support is more understandable. Martin went on to explain the problems faced by Calvados in the UK: "It's very difficult to find importers and distributors, as 80% of Calvados sales in the UK are own-label, through groups such as Sainsbury's and Tesco." Although the large number of British visitors to Normandy has meant that more people are looking for Calvados in the UK, Martin claimed that many are choosing to buy their Calvados in France, due to Britain's high taxes which push its price up this side of the Channel. This gap in the promotion of both Armagnac and Calvados has caused problems, as noted by Mathieson. "With Armagnac it has been having an effect, especially with multiple specialists, as the limited space available for promotions means that its subsidised spot has been given to something else. This could mean a Bourbon sale instead of an Armagnac. The removal of Calvados's promotional budget has resulted in a lack of interest from journalists. Less noise has meant less column inches to catch the eye of buyers. It has lost impetus." Generic support would appear to be much needed to push Calvados sales on. At Unwins, Ian Dobson, senior buyer for spirits, tobacco and soft drinks, explained: "Sales of Calvados are fairly consistent. If anything could be done to increase sales, this would have to come from a generic Calvados body to achieve anything."

Holding on

Yet despite this, both markets are managing to hold on, with growth of certain styles and brands at all levels. Mathieson has seen the strongest sales at the higher end of the spectrum: "There's definite interest in special styles of Armagnac, such as single vintage and Hors d'Age bottles which continue to do well. The more standard lines, such as VS or VSOP, own-brand or branded products sold by the majority of retailers, don't seem to increase or decrease. It remains constant at between 25,000 and 30,000 cases shipped per year." The competitive price of most Armagnac and Calvados has been given as one reason for their continued appeal. This has been affirmed for Armagnac by the experiences of Giles Wood, sales and marketing manager at Phillips Newman Agencies, importer of Samalens Armagnac, sales of which have increased considerably, particularly after its price was lowered. Wood said: "Because of the strength of the pound against the franc, we have been able to reduce the RRP. This is a tremendous alternative to Cognac, as you can't get a Cognac with that kind of age at that price. The sales we're seeing are proof that people will buy it at the right price Pricing is an important issue even at this end of the market." Wood also considers Armagnac's flavour to be another point in its favour. "The continuous still gives a smoother spirit, which is what people are looking for at present." Variety is another point in Armagnac's favour, as observed by Mathieson: "I think that these special Armagnacs are much more interesting spirits than listing a whole row of XO Cognacs. They have different ages and styles from the different stills. There's a broader reach of flavour available and you can persuade customers to experiment more with Armagnac than Cognac. Cognac has all the same stills and is dominated largely by just a few houses."

Niche markets

Although the markets are small, there is a regular demand for fine old Calvados and Armagnac from connoisseurs and collectors. Stuart Barclay, fine wine and spirits buyer at madaboutwine, which lists a wide range of both spirits, has witnessed a buoyant market for vintage bottles. He too considers that they offer good value for money. Armagnac in particular is benefiting from a visible vintage year, and with recent bottlings it can be offered in "pristine condition". Many of madaboutwines's Armagnacs are bought as anniversary gifts, which Barclay feels offer a good alternative to old red wine, particularly in difficult years, while its old Calvados is purchased by collectors. He said: "Armagnac is a constant seller. We're selling 30-, 40- and 50-year-old products all the time. A lot of people are looking for unusual anniversary years so there's quite a good throughput of vintage years. The quality is very good. Aged Armagnacs are different from Cognacs, becoming honeyed and delicate with age." Barclay added: "Calvados is different in that it doesn't produce vintage cuves every year and a lot are blends. Individuals who go for Calvados tend to know their product very well, it's a tiny market. The strength for Calvados is its rarity. The quality's there, the presentation is good, it fits into a niche area of collectors We've been seeing constant growth in Armagnac and Calvados sales, tending to come from people who are very aware of what they're buying." This is reinforced by Calvados producer, Christian Drouin, who said: "Calvados is only known by a small number of amateurs'. Education of consumers is the main challenge." For the uninitiated, the labelling of Armagnac and Calvados can prove confusing, an issue taken up by Armagnac producers who have introduced simpler age indications, with more emphasis on vintage labelling (see Armagnac facts, below) to gradually replace the VS, VSOP, XO system. This move has been welcomed by producers and importers alike. Wood said: "While Cognac drinkers might be familiar with what these mean, for Armagnac it has never been as clear. This simplification should at least aid the understanding of what's in the bottle. With age statements consumers know more about what they're getting."

New style

Although Armagnac and Calvados are traditionally drunk neat, some producers are aiming to broaden their appeal by promoting the different ways in which they can be drunk. Calvados Boulard is pushing the message that Calvados can be mixed with tonic, in cocktails or with hot coffee. Terry Barker, marketing director for Calvados Boulard at Cellar Trends, said: "Calvados has a very enduring, traditional image of quality and full flavour. This gives bartenders great confidence to serve it in many different ways." Armagnac too has seen new initiatives, such as Anda, a pre-mixed Armagnac and carbonated orange drink, recently launched in France and aimed at the youth market. This approach has not been welcomed by everyone, many feeling that this downgrades a premium spirit. A more widely accepted direction is the development of the young and blanche Armagnac categories. In recent years Armagnac and Calvados have been able to recruit few new drinkers, an issue that must be addressed if the categories are to grow. The brand Janneau has realised this and is consequently focusing on its more accessible five-year-old Armagnac in the coming year. Mark Symonds, brand group manager at Janneau's UK agent, John E Fells, said: "This product appeals to a younger audience and has all the right credentials to compete in the current spirit market - tradition and heritage, combined with a contemporary presentation and a product which is double-distilled for extra smoothness." Although it is mostly sold in the multiple-grocer sector, Symonds claimed: "It has also performed well in the on-trade, where it has been promoted as a pouring alternative to the traditional Cognac style of brandy."

On-trade opportunity

If the multiples are proving difficult for Armagnac and Calvados to crack, then the on-trade looks like having potential. Marquis de Montesquiou is another Armagnac endeavouring to promote a modern image and is being introduced to the nation's coolest bars by Marblehead Brand Development. Marblehead's sales and marketing director, Dave Steward, said: "As our developing bar industry grows, there will be room for Armagnac. We're going to bars all over the UK to educate bartenders about Armagnac and offering them the challenge to create something new with it, hoping to get Armagnac included in at least one drink." The fact that Calvados and Armagnac have held on for so long in the difficult UK market, with minimal promotion, is encouraging. As generic support may not be immediately forthcoming, it looks as if it is time for the producers and brands to step in to persuade British writers, buyers, bartenders and consumers that these spirits have a lot to offer.

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