Hennessy vs. Agave: Cognac Dwindles Out in Premium Category as Tequila Balloons in Popularity

(Photos: ConfinedRiley/Pexels, Todd Williamson/AP Images)

A fight between high-end tequila and cognac is breaking out in the American market. If trends continue, the success of one category might spell doom for the other.

According to a recent IWSR Drinks Market Analysis, cognac showed consistent growth across the US between 2014 and 2021 before sales volume dropped 20% in 2022 and 16% in 2023. In comparison, tequila has grown in the sharp double digits year after year since 2017.

Sales figures show it’s an issue of direct competition.  The premium spirits market — defined by glitzy $100+ brands — has exploded in popularity; consumers are increasingly looking to buy one or two high-end bottles rather than a handful of cheaper ones. In practice, this means that the trendy option wins out at the disadvantage of the old favorite.

“Our research shows that Cognac drinkers are two times more likely to drink tequila than alcohol drinkers in general,” explains Richard Halstead, COO of Insights and Custom Analytics at the IWSR. “And both categories generally find themselves in competition at similar consumption opportunities – social, uptempo occasions.”

Tequila is projected to overtake vodka as the U.S.’s most valuable spirit in 2024. (Photo by: Gabriel Trujillo//AP Images)

Research also points to tequila’s cocktail versatility and its broad appeal between both men and women as significant drivers of growth. Above all else, the sheer number of options is incomparable.

“Tequila has a number of inherent advantages over Cognac in terms of its scale, diversity and versatility,” remarked Jose Luis Hermoso, Research Director at the IWSR. “Tequila boasts a wide variety of styles and price points versus the relatively narrow – and expensive – range of products available in Cognac.”

If you walk into any liquor store in the country, the difference between premium tequila and cognac choices is like night and day. From Casamigos to Don Julio to Clase Azul, expensive tequila bottles are releasing at a breakneck pace, providing plenty of visual variety for casual and die-hard consumers.

High-end cognac, meanwhile, is dominated almost exclusively by Hennessy, a consistent top-seller with over 250 years of brand legacy. Though competitors like Remy Martin and D’usse VSOP have muscled in on the market, there is no question that Hennessy is uniquely synonymous with premium cognac in the eyes of most consumers.

When Hennessy loses market share — down 11% in 2023 — it creates a tricky situation for high-end cognac as a whole.

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