Hennessy expects to gain market share over next decade

SINGAPORE : Alcohol producer Moet Hennessy expects to increase its global market share by at least 10 percentage points in the next decade.

It plans to do this by tapping growth markets in Asia, especially China.

Part of the strategy involves introducing new product lines to broaden its appeal and a focus on branding.

Moet Hennessy is optimistic about capturing a bigger slice of the pie for cognac.

Over the last 10 years, it has gained market share from 34 to 44 per cent. It is now gunning for about 55 per cent market share in the next decade.

Gilles Hennessy, EVP, Moet Hennessy: "If you look at the last 10 years, we have exactly gained for Hennessy one point of market share per year. So 10 points of market share in the last 10 years, why not 10 more in the next 10 years? We went from 34 per cent to 44 per cent; there is no limit to the potential of this brand."

Branding is likely to be a key strategy, which includes keeping prices consistent to maintain the exclusivity of the brand.

Mr Hennessy said: "Another major marketing initiative is that we have held to ... our prices in a sluggish economy. A lot of people have done big promotions, cut prices. We have not done that because I personally believe that coming out of the recession, people who have cut prices will find it extremely difficult to raise them again.

"And at one point of time, the consumer is going to say, 'Well you know, you've given me this for $50, why would I want to pay $100 tomorrow for the same product?'

"Well, if we look at the cognac market for the Hennessy, we actually gained market share in 2009 worldwide. So that proved we were right. Again, I think it is consistency.

"One of the other brands in the LVMH group, Louis Vuitton, never ever goes on sale. It's the only brand in the world that never goes on sale. And therefore the consumers of Vuitton, they know it will not be cheaper in future."

Hennessy said its strategy has been proven right, when it continued to expand its market share in 2009 despite the recession.

Going forward, the firm is looking to grow in new areas, such as China. This will involve hiring some 40 more staff there - largely in sales - each year for at least the next three years.

Mr Hennessy said: "The expansion is putting more sales people, more managers, more marketing people. In China, we will be hiring a further 40-odd sales people to cover new territories.

"You have to be of a certain speed to be able to put them in place, because one - they need training on our brands. It's a planned programme, I would say, over the next three years.

Other markets the company is bullish on are Vietnam and Taiwan. However, it is less optimistic about breaking into the Indian market because of the high tariffs in place.

Hennessy is also looking to broaden its appeal to a younger crowd through its global music initiative, Hennessy Artistry.

It is also looking to widen its range of offerings by introducing new products. It recently launched one in the US, called Hennessy Black, geared towards the younger nightlife crowd.

Mr Hennessy said: "We've launched quite a few line extensions of Hennessy Paradis - that's at the top end of the market. You have to keep innovating - could be by the end of the year or the beginning of the year, another line extension of Paradis."

The firm is also shrugging off concerns about the weak euro, saying it should be cushioned from the effects because its exports are largely in other currencies.