Hennessy is the top selling cognac in the world, with $3.1 billion in sales in 2018. Cognac can only be produced in the Cognac region of France from Ugni Blanc grapes. Hennessy has been successful due to generations of experience in the industry, extensive branding and sponsorships. While cognac production has high costs due to ingredient sourcing, Hennessy has been able to maintain its position as a luxury brand and price its products accordingly despite some risks from changing consumer preferences and input prices.

1. A Presentation By:
Yolanda & Ashley

3. Overview
● Created by an Aristocrat Irishman Richard Hennessy in
1765.
● Hennessy is the top selling Cognac with sells of $3.1 B
in 2018
● The number one selling alcoholic beverage in the world

4. History of Market
● The 1st Cognac created in the 16th century
● Dutchman traveled to France to get wine but
wasn’t able to keep it preserved.
● Distilled the wine 2x to preserve it and created
French Brandy (Cognac).
● Only Brandy made in Cognac, France is called
Cognac
● Wine based liquor

5. Competitors
$33.99 $34.95 $19.97

6. Revenue Streams
10k yearly events
Collaborations:
Pyer Moss (clothing line), Celebrity sponsors,
Converse, film, music, art, and athletes
Brands:
Black, White, V.S., V.S.O.P, Fine de, XO,
Private Reserve, Paradis, Deutschland Moet,
Diptyque, Richard, Timeless,
Eclipse, Beauté du Siècle, VVVV, No.1, Silver
Jubilee, Prive, First Landing, Library, James

7. Competition Structure
MONOPOLISTIC
MARKET

8. Consumer
Income
● Rising product cost and
stagnant wages will
decrease sales.
● Consumers will start
buying the copycat version
of Hennessy.

9. Substitutes & Compliments
Or

10. Market
Pop-up shops: Hennessy & A Meal
Working with College Institutes to promote creativity
Rise in sales with Millennials

11. Exceptions w/in market
● Mixed drinks or cocktails on the rise
● Targeting female buyers
● Rise in demographics
● More collaborations to target different
consumers.

12. Cognac shipments for the
twelve month period from
April 2017 to March 2018 hit
a record of more than 200
million bottles
● Young Ma Song
“ooouuu”
● Commercials &
Sponsors
Sales volume of Hennessy cognac worldwide from 2009 to
2018 (in million 9 liter cases)

13. Raising the price will not hold much of a
difference
Lowering will result in more sales but
profit will lower
Hennessy is seen as a luxury drink
which is why they can sell their product
for the price they do.
Elasticity

14. While other spirits can be made with
inexpensive products cognac requires the
premium ingredient of grapes grown in a
very specific place.
Hennessy narrows the ingredient list down
even further by using the Ugni Blanc grape
exclusively.
Due to severe and changing weather, the
cost of Ugni Blanc Grapes can skyrocket or
plummet. This can either cut into expenses
for Hennessy or work in their favor.
Input prices

15. Technology
Self Driving Cars
Without the need to drive home after a
night at the bar, drinkers could also
consume far more. And that will boost
alcohol sales, one analysis predicts, by
as much as $250 billion.
The Foundation for Advancing Alcohol
Responsibility (an industry-funded
nonprofit that battles underage
drinking and drunk driving) signed on
in support of a pending bill that would
speed the commercialization of
self-driving vehicles.

16. Self Driving
Cars

17. Expectations
One of the factors driving the bull
market:
● high consumer confidence,
with consumer spending
growing at a robust yearly rate
of 4.8% as of October.
● Other factors include
increasing corporate profits,
an unemployment rate of 3.7%,
which is the lowest since 1969,
and wages rising at a rate of
2.7%.
Corporations increased
their investment spending
year over year by 10% in
the first half of 2018. This
spending was driven by
the lowered corporate tax
rate and a robust GDP.

18. Kelley (co-manager w/ Neil
the Hennessy) said “the
compelling theme for 2019
was to find opportunities in
momentum at attractive
prices, high quality
companies with improving
earnings, and forgotten
brands and turnaround
stories.”
Neil J. Hennessy
Ryan C. Kelley,
CFA
L. Joshua Wein,
CAIA

19. Entry/Exit
It takes a great amount of money to be
as successful as Hennesy. They’ve
had generation in the industry.
It would take competitors:
● Proper branding and Advertising
● Sponsorships or Loans
● Years of consistency and
exposure
Yet, it would still be very difficult due to
the Hennessy collaborative Brands.

20. 350,000
THE NUMBER OF CASKS THAT REST IN
HENNESSY'S CELLARS
70
MILLION BOTTLES SOLD EVERY YEAR
ALL OVER THE WORLD
Hennessy is sold in 138 countries
around the world.
Most Liquor Stores including Publix
Walmart, and ABC Wine
Establishment Numbers

21. References
https://www.billboard.com/articles/columns/hip-hop/7326595/nas-hennessy-piccards-film
https://blog.cognac-expert.com/ethnic-divide-cognac-usa-liquor/
https://www.cognac.com/blog/hennessy-global-cognac-sales/
https://hypebeast.com/2019/6/felipe-pantone-hennessy-vs-collaboration
https://www.intowine.com/what-cognac-history-most-famous-french-brandy
https://jingdaily.com/hennessy-cognac-drinkers

22. References
Slide 13 - https://www.wineandliquorprices.com/hennessy/
Slide 14 -
https://www.washingtonpost.com/news/wonk/wp/2018/03/13/why-the-liquor-industry-wants-to-get-self-driving-cars-on-the-ro
ad/?noredirect=on
Slide 15-
https://www.forbes.com/sites/lcarrel/2018/12/21/despite-downdraft-hennessy-believes-bull-market-will-continue/#1f7dc9415
149
Slide 16- https://blog.thewhiskyexchange.com/2018/03/cognac-beginners-guide/
Slide 17- https://www.hennessy.com/us/
Video - https://www.youtube.com/watch?v=4RYmtQ4aSeA