Leopold Gourmel: a cognac brand ignoring the chinese market

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Today we introduce to you a case study of French Cognac producer who ignore the Chinese Market.

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leopold_gourmel

 

Cognac Gourmel

 

This small producer of cognac is still resisting the call of the Chinese cognac market. How can such a choice be explained while China represents nearly 23% of the world market and 96% of French production is  for export ?

 

A question of brand image

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Olivier Blanc, founder of the Leopold Gourmel house, which produces upscale Cognac chose to ignore the Chinese market to maintain its brand image. For the producer  the chinese market is too young. According to him, the Chinese public, accustomed to brands like Hennessy and Martell, is not yet ready to enjoy the premium cognac and confidential.

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Hennessy China

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Ok no doubt that China remains a very brand oriented market. So what ? Do every small producer has to give it up ? I don’t think so. Let’s see why such a view is a nonsens.

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Status Quo of the cognac market

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The cognac market  in China is booming. Between the years of 2009-2010, the market growth for exports to this region was 71 per cent. Of course the big brands are leaders in the chinese market. The four major brands  enjoyed by the Chinese are Hennessy, Martell, Remy Martin and Camus. But Leopold Gourmel makes a mistake when he thinks that chinese are non connoiseurs consumers when it comes to cognac. China lies in third place (behind the US and Singapore) in terms of volume but chinese have a penchant for XO that is to say for the older Cognacs.. In terms of value, China is already the number 1. Compared to other cultures, Chinese perception on quality correlates strongly with high prices.

Remy-Martin-Cognac-XO

 

This could be an opportunity even for small producers. But let’s focus on the Gourmel case

 

A need for differenciation

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Gourmel exports represent not less than 90% of sales by Leopold Gourmel. So how can he explain his rejection of the chinese market. For him “Three brands shared 84% of sales in the world,”  and “when if (you are) small, it is necessary to differentiate, create a brand image.” And Olivier Blanc finish with “My enemy is standardization,”.

This need for a qualitative differenciation Olivier Blanc made it with a biological cognac.

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Leopold-gourmel-vsop-cogn

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Ok with that. Olivier Blanc want to create a qualitative differenciation for his brand and to focus on specific targets. And for that he think that he should start with the french market before conquering the rest of the world. For him, France is a top priority because it is a very important source of professionals.

With this strategy, Olivier Blanc is pleased to have been able to win what he has called “alter-consumers” who trust prescribers they have chosen rather than a brand.  Olivier Blanc also admit an aversion to the idea of ​​advertising: “If one day I advertise in a newspaper, I lose my customers!”.

For me such a view is really old fashion but understandable. Olivier Blanc may have in his head an idea of advertising related to the classic media area (Press, Radio and TV). But we are now in the era of social network. Consumers are no longer passive and a brand with a well designed digital strategy can be successfull in engaging a conversation with its public. Especially if small brands take in consideration the small cost of SEO campaign, KOL (Key Opinion Leader campaign) and community management.

“I will not change for China, I expect it to change for me”

This is the classic french way of thinking. And a huge mistake. Now luxury brand whether they are big or not have to think about webmarketing.
Olivier Blanc admit that the Cognac Leopold Gourmel is exported to 64 countries. Half in Europe, especially in northern countries, where the relays are professionals. The United States accounts for between 10% and 15% of total sales, with an important niche for premium cognacs. Russia is also part of its medium term, due to the large middle class, already educated about spirits, which develops.

Such a view show that he doen’t know the chinese public.

First, regarding Cognac you will find many connoisseurs in China.

connoisseur.1

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Second the chinese public like pedagogical brand. The are fast learners and with an adapted digital strategy even “alter consumer” can be reach. How long will french producers stay behind in term of webmarketing and use of SNS (Social Network System).

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Thank you Vincent

Marketing China