Bloomberg: Your Next Investment Bourbon Should Be a Brandy

Illustration by Nico H. Brausch

By Christopher Ross

June 18, 2024 at 6:27 AM UTC

Bourbon collectors, I feel your pain. What was once a niche hobby for booze geeks has become a forbiddingly expensive and competitive endeavor, what with the annual Pappy Van Winkle lotteries (and heist) and secondary markets where a $2,000 bottle of 20-year Eagle Rare can leap to $14,000 in just five years.

Still, if you love the hunt for artisanal, rare spirits, have you considered pivoting from grains to grape? The warmth and woodsy flavors of single-barrel, full-strength cognac and Armagnac can closely resemble the taste of bourbon, at a more attainable price point.

“Folks who’ve had the opportunity to taste these bottles notice, wow, there’s that concentration, that similar profile of combining fruit and structure from the wood,” says Greg Faron, co-founder of new importer Bien Élevé in Washington, DC. Some vintage brandy can compare in flavor to glut-era bourbon, he says, referring to the 1970s-to-early-’90s period when distillers cleared out older, languishing whiskey stock under younger labels.

Bien Élevé joins established importers PM Spirits and Charles Neal Selections—plus upstarts such as Bhakta Spirits, from the founder of WhistlePig whiskey—as part of an expanding network of bottlers and retailers working with aficionados to build a ground floor for collecting these complex liquors.

Their biggest obstacle? The French.

See, when it comes to investment bourbon, what’s most sought-after are single-vintage bottles, ideally single-barrel, bottled at cask strength—offering a premium of intensity and purity and rarity, traceable to a specific location and point in time. But that’s exactly the opposite of how French brandy is traditionally produced.

Distillers at major cognac houses such as Hennessy and Courvoisier believe the beauty of their craft lies in artful blending; they lock up eaux-de-vie (unaged spirit distilled from grapes) from hundreds of growers to do so. There are strict brandy-making rules around grape varietals, distillation and minimum aging time in oak barrels, but blending isn’t actually a prerequisite.

“I’m French, so I can say this: The French feel they are the guardians of a tradition, which makes them not innovate whatsoever,” says PM Spirits founder Nicolas Palazzi, one of the first importers to bring unblended, collector-bait brandy to the US.

The Cognac region, Palazzi says, is particularly disincentivized to put out the kind of artisanal spirits that US buyers are clamoring for. If a producer decides to set aside a barrel for aging as a vintage cognac, a member of the Bureau National Interprofessionnel du Cognac (BNIC) must be present for its sealing. To open that cask for any reason, including if it’s leaking or damaged, they need to pay for another inspector to come out and oversee the breaking of the wax seal.

Moreover, Big Brandy doesn’t see much long-term strategy in single-barrel bottlings, as it’s only able to achieve its current sales volumes by blending spirit from different casks; the ultrapremium $4,000 Rémy Martin Louis XIII may contain as many as 1,200 eaux-de-vie, some as much as a century old. There are precious few growers in Cognac who don’t sell to the mass-market houses.

Steve Ury, a well-known former bourbon blogger, takes a cynical view of the Kentucky gold rush, so he turned his gaze toward France. He says his steadily growing Facebook group, Serious Brandy, now counts more than 3,000 members. He says American buyers have had to train smaller brandy producers to fill that desire gap between collectors and the conglomerates.

“Their first instinct was, you blend everything, you water it down to 40%—that’s what people want,” Ury says. “And we had to go and say, ‘No, that’s not what we want. We want to see those barrels. Just put ’em in a bottle. We don’t need you to do anything else.’ ”

There’s casks all over the place, all over France, sitting in garages and sheds.

Cognac houses Pasquet and Grosperrin are among producers that have gotten the memo, as well as L’Encantada Armagnac, he says, which can be “very bourbon-like. It’s dark and oaky because they don’t do as much treatment to it, they just sort of leave it in the barrel.”

Reid Bechtle, a collector in Virginia, agrees. He was so enchanted when first tasting L’Encantada’s Armagnacs in 2015 that he and fellow members of his private whiskey club—1789b, which buys whole barrels of spirits—foresaw the untapped demand and purchased three on the spot. Now, he says, L’Encantada’s fame has grown, and its small-batch, orange-wax-topped bottles command such a cult following that it’s often impossible to find at retail. “What we used to buy for $60 is now $300.”

For your own collection, this month PM Spirits is releasing a L’Encantada discovery box ($211) featuring 200‑milliliter independent bottlings of brandy distilled by three different domaines over three different decades: 1999, 2001, 2012. Dozens of years in barrel reveal beautiful tertiary aromas of dried citrus, tobacco and resin.

Cognac Frapin, a family-owned producer founded in 1270, focuses mostly on traditional aged blends, but it, too, is coming around, with help from Palazzi. A 1994 vintage released in May is a first for the maison: single-estate, single-cask, full-proof. Balancing the richness of the wood with subtle orchard fruit, vanilla and leather, it costs $265. Only 500 bottles were made.

Similarly, Bien Élevé imported a single-cask 1967 Cognac Lheraud Bons Bois ($640), perfumed with exotic spice and dried figs and elegantly rounded on the palate. “It’s become more of a focus in France, finally, for single-barrel picks,” says Faron, the Bien Élevé co-founder. Just a dozen of the 132 bottles of the Lheraud Bons Bois were allocated to the US.

I wouldn’t be surprised if major producers started earmarking exceptional casks as well, given that collectible, traditional blends have stalled. The compound annual growth rate by volume of ultrapremium-and-above French brandy was down 2% globally from 2018 to 2023, compared with ultrapremium bourbon’s 22% growth, according to IWSR, a global beverage alcohol data specialist.

“With French brandy, the extraordinary and extensive histories—over 700 years for Armagnac alone—and the tremendous ageability of these spirits, arguably far greater than most whiskeys, should mean that the possibilities for finding great spirits are near endless,” says Nima Ansari, a buyer for Astor Wines & Spirits in New York who stocks about 20 bottles of boutique brandy. Cognac can age longer than bourbon or American rye because of a cooler climate and less char on what are usually older, larger barrels.

But the ultimate factor may be the love of the hunt. As in the early days of searching for bourbon “dusties” on liquor store shelves, there’s a sense of undiscovered treasure out there, if you know where to look and strike quickly when opportunities arise.

If a vineyard hasn’t presold all its grapes to a brandy house, some farmers might have their own spirits distilled for consumption among friends and family or as an investment. “Every farm is a potential producer,” Ury says. “There’s casks all over the place, all over France, sitting in garages and sheds.”

In other words, there’s a lot of potential boutique brandy out there—and it’s all rare. Consider: If an importer comes across the private stash of an elderly couple, buys it and releases 170 bottles, it might be all that family farm ever produces.

For collectors who get a thrill from acquiring a truly one-of-a-kind spirit, it’s tough to put a price on those bragging rights. At least for now, though, a couple hundred bucks ought to do it.

Vinepair: Boutique Cognac Producers Are Betting on Transparency and Innovation to Shake Up the Status Quo

There’s no dichotomy in spirits like Cognac. With a history dating back hundreds of years, the famed French brandy is led by gigantic legacy brands owned by multinational conglomerates. These companies source most of their eau-de-vie from thousands of growers within the Cognac AOC, maturing and eventually blending it into a portfolio of products that start with entry-level V.S. and often extend to limited-edition Hors d’Age (“beyond age”) offerings that can run thousands of dollars a bottle.

Almost all discussion of the category is driven by these leading houses, which tightly control the information they share and work closely with Cognac’s trade group, the BNIC (Bureau National Interprofessionnel du Cognac). Yet they’re curiously reticent about speaking to the press; of four major brands that were approached for this story, only one, Courvoisier, was willing to make someone available for an interview. Nicolas Palazzi, owner of PM Spirits, which imports boutique brand Frapin Cognac among others, calls the industry a “black box” of secrecy.

“There has been a lack of information and a lack of transparency from Cognac in general because it’s easier for business,” he says, explaining that baked-in ambiguity — part of the regulations governing Cognac production — allows blenders to incorporate a variety of liquids into their products without disclosing their ages, or if they use additives. “The less things are transparent, the more a brand can play around to meet the demand. There’s a reason why there’s no vintages on bottles—why no one tells you [the age].”

Though they dominate sales, the big houses aren’t the only players in Cognac. There are also estate distilleries, small-scale négoçiants (independent bottlers), and growers who hold back some of their distillate to sell under their own name. The volumes they produce are but a drop in the barrel, and many operate under the same veil of silence as the rest of the industry — no doubt because they rely on the success of the leaders to buoy the region’s fortunes as well as their own.

But the little guys are becoming an increasingly important factor in the equation of U.S. market sales. The spirits boom of the last two decades has yielded a crop of knowledgeable consumers who are curious, engaged, and on the lookout for unique products. They’re asking questions, demanding transparency, and searching for what’s authentic. Is the Cognac industry prepared to give them what they want?

The New Cognac Consumer

Cognac has been on a tear in the U.S. market over the past two decades, selling 9.28 million cases in 2022, compared to 4.15 million in 2012, and just 3.7 million in 2002, according to the BNIC. The bulk of that growth has come from a handful of brands: Hennessy, Rémy Martin, Courvoisier, Martell, and, more recently, D’Ussé. Luxury positioning, sophisticated marketing, and celebrity affiliations have contributed to this runaway success, as has the sheer volume that these big companies are able to execute as demand ramps up.

Alongside this growth has been an expanding base of engaged, curious consumers. “Knowledge [about Cognac] is much more democratized, distributed — all over the internet,” says Max von Olfers, co-founder of cognac-expert.com, an e-commerce site dedicated to brandy. When he and his sister, Sophie, started the website in 2009, “the big trend was what we would call ‘influencer Cognac’”—brands with celebrity partnerships, like Ludacris with Conjure Cognac or Jay-Z with D’Ussé. “Today’s trends were very far away — not even visible,” Olfers says, mentioning vintages, high proof, organic production methods, and single barrels as some of the buzziest topics his customers are now seeking out and discussing. “This connoisseur-ization of the Cognac world is really what changed in recent years.”

The trend was already underway when the pandemic began in March 2020. For the first few months, spirits purchase patterns tended to favor more established brands as people sought familiarity. But eventually consumers adjusted to virtual tastings and online shopping, and were back to exploring new-to-them brands and products. “Consumers were way more open-minded to spending money on new items in 2020 and 2021, and we definitely benefited from that,” says Guillaume Lamy, managing director for the U.S. arm of Ferrand Cognac, a brand whose releases, which include unique cask finishes and other atypical characteristics, tend to showcase an outsize level of creativity for the category.

During the early days of the pandemic, when people were reluctant to shop in person, retailers like Baytowne Wine & Spirits, in the Rochester suburb of Webster, N.Y., turned to the phone and social media to walk customers through their options. General manager James Pellingra says that the “new normal” allowed him and his staff to highlight the boutique and artisanal offerings the store stocks. “Because we were able to communicate in such a detailed way … you see some of the smaller producers that are extremely historic in the European market start to take over a little bit in the American market,” Pellingra says, citing Fanny Fougerat and Jacky Navarre as two top sellers.

The process was accelerated when Hennessy, which is far and away the largest Cognac brand in the world, fell victim to supply chain trouble and began to temporarily disappear from shelves. Pellingra says that at first Hennessy customers switched to D’Ussé; then, when D’Ussé began experiencing out-of-stocks, they looked to the store’s artisanal offerings.

It was a lucky break for the little guys. “We were able to fill the shelves of some retailers who were used to having the big four or five Cognacs but were not able to get them,” says Christine Cooney, co-owner of Massachusetts-based Heavenly Spirits, which brings in several small Cognac brands including Monnet and Jean Fillioux. “Sometimes the hardest part of us selling smaller producers is to get on the shelf.”

And now that they’re there, Cooney says, her brands are selling well enough to maintain their spot. “They usually stay on the shelf because once people discover how good our small producers are, then the product is being reordered.”

The Push for Transparency

The reasons for this sustained success aren’t hard to spot. Boutique Cognac brands are high quality and, for marques above VSOP, they’re often priced competitively, if not well below mainstream offerings. Plus, they’re willing to share information that the big guys tend to keep under wraps. “I’ve found the littler producers are more open to talking about process,” says David Othenin-Girard, spirits buyer at California retailer K&L Wine Merchants, whose Cognac selection focuses on small-production brands such as Dudognon and Jean Grosperrin. The small brands that Cooney represents often participate in video tastings; education, she says, is a keystone of the company’s strategy.

Though most people drinking Cognac are still seeking the mainstream brands, Baytowne’s Pellingra says that the value proposition of smaller producers is a big draw for retailers. Plus, he adds, “They’re more transparent about where their fruit comes from, the process in which they’re distilling, how they’re aging, rather than some of the bigger brands where everything is kept secret.” That’s a big win with customers. “We want to know where our product comes from, how it’s made, and how it gets to us,” Pellingra says.

Much of that desire for transparency is being driven by whiskey drinkers who are exploring Cognac for the first time, and bringing their expectations and biases with them. Olfers, while including rum drinkers as well, calls them a “new wave,” adding: “This group is a small but very loud group. They are mixing up the Cognac world.” He sees their influence in the growing cadre of private bottlers offering unique barrels and bottlings.

“The story has gotten out: The big houses source from hundreds of growers and producers,” says writer Jason Wilson, who covers Cognac regularly in his newsletter “Everyday Drinking.” “But you’re starting to hear this story that the smaller producers keep a few of the very best barrels for themselves over the years, and now you have these smaller négoçiants that are going out and sourcing barrels from these old-timers,” he says. “That’s what the real spirits enthusiasts want.”

Pellingra’s experience at Baytowne bears this out; customers snap up whatever single-barrel brandies he can bring in — not just Cognac, but Armagnac and Calvados, too. “The American market has finally realized they can buy 20-plus-year-old brandy for a much more reasonable price than 20-plus-year-old whiskey,” Pellingra says. “And it’s much more readily available. … If you go in looking for a bottle of bourbon [at that age] — I mean, most places are going to laugh you out of the store at this point, unfortunately.”

Cooney has seen the same trend in Heavenly Spirits’ portfolio. “We have sold a few Cognac [single] casks at full-proof,” she says. “That kind of Cognac is a draw for whiskey drinkers” because of the high proof — unusual for Cognac, which is almost always bottled at or near 40 percent ABV. For these customers, Cooney says, “the higher, the better.”

Untapped Potential

Let’s be very clear: Small Cognac brands are never going to make up more than a tiny fraction of the massive, and massively successful, Cognac industry. The top five brands make up more than 96 percent of the market, according to Impact Databank, with Hennessy alone accounting for more than 55 percent. These volume leaders may not notice or care that a niche subset of spirits buyers are pursuing boutique offerings, since their success has historically been driven by a different kind of drinker — one who’s often brand-loyal above all else. Still, there are signs that some big brands are trying to reach more hardcore spirits enthusiasts. Courvoisier, for example, released a mizunara cask-aged offering in 2022 that was partly made by Japanese master whisky blender Shinji Fukuyo, clearly targeting whiskey connoisseurs.

But outside of the leading five houses, Cognac producers looking to make a mark in the U.S. would be wise to pay attention to what consumers say they want. “The potential of the category for producers and drinkers has not even begun to be scratched,” says Nima Ansari, spirits buyer at New York’s Astor Wine & Spirits. “A lot of the things that are exciting people in other categories already exist in spades in Cognac, too.”

If they’re going to make a go of it, boutique producers should be prepared to work hard. “The small guy has to do it hardcore,” Palazzi says, meaning: find the right importer and wholesaler partners, put in the time and effort to do consumer and trade tastings, and tell the story constantly. “That stuff is extremely hard. It’s a labor of love. There’s zero money in it.”

But, he says, “if they find a megaphone in the U.S. market, then they can express this and distance themselves from the big guys.” For small Cognac producers trading on their authenticity and transparency, that just might be the best way forward.

Seven Fifty Daily: What’s Driving the Growth of Calvados in the U.S. Market?

As Americans’ love for apples coincides with a rising appreciation for brown spirits, Calvados finds a new home in the U.S. market

Calvados is a traditional spirit dating back to 1800s France, but it’s experiencing exponential growth in the U.S. Photo Courtesy of Rogery Groulty Calvados.

In the U.S., cider is no longer enjoying the amazing growth of the past decade, but apples remain a perennial favorite among Americans. Meanwhile, the popularity of brown spirits continues unabated, expanding to embrace brandy as well. These two trends have collided to bring Calvados, France’s classic apple brandy, into more American homes and bars than ever before.

According to the Interprofession des Appellations Cidricoles (IDAC), Calvados exports to the U.S. grew 70 percent in 2021, and then repeated that feat again in 2022, making the U.S. the second largest export market for the apple brandy, after Germany. Numbers like these sometimes need to be taken with a grain of salt coming out of the topsy-turvy years of the pandemic and the global shipping crisis.

Nicolas Palazzi, the owner of PM Spirits, imports three Calvados producers, Roger Groult, Eric Bordelet, and Domaine du Tertre. According to Palazzi, importers are overstocked after bringing in extra product to protect themselves against shipping challenges, and he expects import volumes to level out. 

But Guillaume Drouin, the third-generation owner of Calvados Christian Drouin, feels the trend has legs. “Within the brandy category, apple brandy is doing very well,” says Drouin. “U.S. cider producers have started to produce apple brandy, and there are many more American apple brandies on the shelf than even just five years ago. Calvados is the historical apple brandy of the world, so hopefully it’s taking part in that trend.” 

On this point Palazzi agrees, noting that American drinkers have typically heard of the U.S. apple distillate Applejack at the very minimum. “Calvados, being the big brother of Applejack, being more complex by design, and being from a region where the name signifies something in terms of history, means it’s not as hard to sell when you already have that frame of reference.”

Indeed, the data suggests that this confluence of trends is driving a new wave of interest in Calvados among U.S. consumers and professionals alike.

From the Orchard to the Bottle

Normandy’s Calvados is one of the three classic brandies of France, alongside Cognac and Armagnac; it’s also the only one not made from grapes. The region’s history of producing apple- and pear-based spirits extends back at least five centuries, and the name Calvados came into use after the French Revolution. Production methods were formalized by the end of the nineteenth century, around the same time that Calvados rose in popularity across France, while its grape-based competitors struggled with the effects of phylloxera.

To make Calvados, apples are harvested and vinified as cider without any additions of gas, acid, or sugar, and the cider is then distilled and aged in wooden casks. A mix of apple types are permitted, but at least 70 percent must be bitter or bittersweet apples, and the rest classified as sharp or sweet; all are apple varieties that would otherwise be inedible to human palates.

Owner of Calvados Christian Drouin, Guillaume Drouin (pictured above) believes the sudden interest in Calvados spirits has staying power in the U.S. Photo courtesy of Calvados Christian Drouin.

The traditional Calvados orchard is planted with tall, high-stem trees, with fewer than 300 trees per hectare. Modern orchards are more densely planted with smaller, low-stem trees that are easy to manage and higher yielding, but are more work intensive. High-stem vineyards allow for cow pasturing and other uses among the trees. Many leading producers favor high-stem vineyards, and some use them exclusively.

Types of Calvados

Today, Calvados is made under three different appellations spread across Normandy and dipping occasionally into neighboring departments. The largest, Calvados AOC, makes up 70 percent of production, and is typically distilled in a column still; 35 percent of the apples must come from high-stem vineyards and the spirit must be aged for a minimum of two years. The Calvados Pays d’Auge is the oldest AOC, created in 1942. It’s a smaller area, has the same aging requirements, but is more stringent regarding apple sources, 45 percent of which must come from high-stem orchards. Calvados Pays d’Auge, uniquely, must also be double distilled in a pot still. While other Calvados can have substantial amounts of pears used in their production, Pays d’Auge limits pears to 30 percent of the fruit used.

In contrast, the newer, more southerly Calvados Domfrontais AOC, created in 1997, requires a minimum of 30 percent pears; the area is dominated by high-stem pear orchards. Calvados Domfrontais is produced using a column still and must age for at least three years before bottling; despite the longer aging requirements, the column still and high pear content typically yields a fresher, lighter style of Calvados.

All the Calvados appellations are open-minded regarding labeling rules, allowing age and quality statements on products that meet the given requirements. There is enough room within the regulations for producers to offer specialty products, so Calvados is able to keep up with trends found among other brown spirits. For example, Calvados can be aged in different types of vessels, such as older barrels left over from a previous generation, and bottled separately.

Christian Drouin has collaborated with distilleries such as Hine Cognac, Calle 23 Tequila, and Caroni Rum to use their barrels to finish Drouin Calvados bottlings. Drouin, Groult, and others have stepped outside the Calvados appellation to produce unaged apple brandies as well. Some producers have also introduced cask strength Calvados, bottled without being reduced back to 40 percent alcohol.

Small Producers, Small Environmental Impact

Compared to other French brandies, Calvados is well-suited to fit in with the craft ethos of America’s brandy scene, with a wide range of medium and small producers. “Calvados is still a very craft category,” says Drouin. “Even the bigger Calvados producers are very small compared to the Cognac or whiskey industry.” Calvados overall includes 8,000 hectares of orchards, making it just over a tenth the size of Cognac. Nonetheless, Calvados includes about three hundred producers, a greater number than in the more famous grape brandy region.

Drouin says Calvados’s green credentials also deserve to be better known. “We examined the carbon footprint of our company, and we calculated that every time we produce a bottle of Calvados, the equivalent of three kilos of CO2 is absorbed,” says Drouin. “So it’s probably the only spirit in the world which can show, without any effort, a negative carbon footprint.” According to the IDAC, Calvados orchards on average sequester 35 to 50 tons of carbon per hectare over a 25-year period, and the orchards also provide four times the habitat for bees and other pollinators than other field crops. 

Calvados is also seamlessly sustainable, requiring very little in the way of reducing the carbon footprint of the spirit’s production. Photo courtesy of Roger Groult Calvados.

That footprint is tied to the small volume produced per hectare—about one quarter that of grape brandy—and the biodiversity in the orchards, with cows grazing on the grass beneath the trees. In addition, the traditional, tall-tree orchards require no spraying. Workers visit the vineyards for pruning and harvesting, but little else; it’s very minimal interference compared to grain fields or vineyards, where tractors might pass through on a weekly basis. “It’s nothing new,” says Drouin. “It’s historical. We just have a protected way of production that’s sustainable.”

Calvados and American Cocktail Culture 

While the pandemic spurred more off-premise purchases of Calvados, Drouin says 70 percent of their sales go to on-premise outlets. Leanne Favre, the creative director of Leyenda and Clover Club in Brooklyn, says that as a spirits geek she enjoys Calvados neat at home, but that sales in the two bars are mostly in the form of cocktails. “It’s getting a lot more showtime in cocktails and on menus than I’ve ever seen before,” she says.

Favre adds that the wide range of styles available, from lighter, fresher examples to more aged expressions, means Calvados has a lot of different uses today, and needn’t be confined to autumnal, seasonal drinks. “It’s amazing how much range Calvados can bring to your menu when you start including it.”

More and more Calvados producers have been visiting the U.S. market and promoting their spirits, and Favre praises the Calvados industry for recent initiatives that have helped highlight the variety the category can offer. “You had forty different producers banding together; it really showed how dynamic the category can be, just like Mezcal,” she says. “It’s really worth it to try different producers and expressions.”