Cognac is in a slump. Hennessy thinks it has a fix

Hennessy Very Special Cocktails rolls out to shelves in June. (Hennessy via CNN Newsource)

At 261 years old, Cognac brand Hennessy is starting to show its age.

After a pandemic-era surge in demand, the amber-coloured spirit is navigating a sobering reality. Consumers, particularly younger ones, are moderating their drinking or shifting toward premium tequila. As a result, exports from France’s Cognac region have plummeted. At the same time, tariffs from the United States and China are also taking a sizable bite out of profits for parent company LVMH.

That has put immense pressure on one of the most recognizable liquor brands to evolve.

“It’s a strange thing to have a brand that is not consumed, but culturally very relevant,” said Hennessy CEO Charles Delapalme.

Hennessy is a mainstay in hip hop, with its name used in the lyrics of more than 4,000 tracks and has a strong footprint in sports. In 2020, it became the NBA’s first spirits sponsor and went viral last year with its ad with longtime partner LeBron James. It was also recently named the official Cognac of Formula 1 through a broader sponsorship deal with its parent company.

But these campaigns have not shed the image that Cognac has been “pigeonholed as a ‘dusty’ spirit — something your dad sips once a year while staring into a fireplace,” said Tom Khan-Lavin, CEO of YesMore, a drink marketing agency.

He added that it has “lacked the consistent, fresh reinvigoration needed to stay relevant.”

Hennessy’s U.S. depletions, a key measure of sales from distributors to retailers, slid 9 per cent to 2.92 million cases last year, according to Impact Databank. That’s a sharp decrease from its peak of 5.13 million in 2020, when customers spent heavily on spirits during the Covid-19 lockdown.

“The category hasn’t effectively communicated why a younger audience should care about it, let alone buy it,” Khan-Lavin told CNN. “While rappers have done a heavy lift in keeping a few specific brands in the cultural conversation, that success hasn’t trickled down to the rest of the category.”

Repairing the shine of the top-selling Cognac brand is the biggest challenge facing Delapalme, who was named Hennessy’s CEO a year ago.

“We have a great history and heritage,” Delapalme told CNN. “But we cannot only refer to this heritage and assume it’s going to shape the next 260 years.”

Making a ‘big move’

To help future-proof Hennessy, Delapalme’s first major initiative is entering ready-to-serve cocktails category — one of the few bright spots in the ailing alcohol industry.

Although overall alcohol consumption in the United States fell 5 per cent last year, sales of spirits-based bottled cocktails rose 14 per cent, according to trade group IWSR.

For Hennessy, it’s a “big move,” because it’s the first time in the brand’s nearly three-century history that it has sold a product containing ingredients besides Cognac itself, Delapalme said, adding that it “ticks many boxes” to appeal to a younger customer.

First off, premade cocktails are lower in alcohol content, which ideally attracts younger, legal-aged drinkers who want convenience and prefer cocktails over straight spirits. Secondly, its lighter taste profile positions Hennessy for daytime drinking occasions where vodka-based seltzers like E & J Gallo Winery’s High Noon, Sazerac’s BuzzBallz, and Anheuser-Busch’s NÜTRL are among the top sellers.

“Ready-to-share products are growing because they solve very simple consumer problems: they are convenient, easy to understand, easier to share, and usually cheaper than ordering premium cocktails or buying full-size bottles,” said Vas Art, head of marketing for beverage agency OhBev.

Hennessy is entering an established category. Similar products include Suntory’s On The Rocks and Diageo’s Cocktail Collection, which use recognizable liquor brands, like Ketel One and Jim Beam, in their drinks. Both companies report the products have had double-digit sales growth in recent quarters.

Hennessy’s entry uses Very Special, its cheapest Cognac, and comes in three different flavours: margarita-inspired version, berry (blackcurrants and blackberries) and an iced tea. The 375-milliliter bottle has about four servings and is priced at $15.99.

“Hennessy Very Special Cocktails” has been in development for more than a year and will begin rolling out to store shelves in June.

“This is less about replacing Cognac and more about creating a lower-barrier entry point into the brand,” Art told CNN, adding that younger drinkers, notably Gen Z and Millennials, aren’t attached to traditional drinking formats and are willing to try new ones.

Hennessy’s marketing strategy reflects the shift to a younger customer.

The ad campaign features two influencers (Quenlin Blackwell and Salem Mitchell) and “Love, Victor” actor Michael Cimino. Combined, they have a massive reach on social media, totalling more than 5 million followers on Instagram and 14 million followers on TikTok.

The ads are set on rooftops, beaches and friends’ apartments. They all feature daytime socializing rather than the dimly lit nightlife settings traditionally associated with Cognac.

Hennessy’s Delapalme said the aim of the ads was to “send a message of energy, joy and to make Cognac approachable.”

Attracting younger consumers could help Hennessy in the long term, too.

“A young consumer may first experience the brand through their ready-to-share product. Later, as their income, taste, and drinking occasions evolve, they may move toward the core Cognac portfolio,” Art said.

Struggles and success

Moët Hennessy is facing many of the same problems weighing on the broader alcohol industry, such as tariffs and recovering from a post COVID-19 boon.

The Paris-based unit has reported three consecutive years of revenue decline, with Cognac being its worst performer. Although Hennessy had a boost in the beginning of 2026, buoyed by strong sales for Chinese New Year, demand from the US remains weak and is forecasted to struggle for the rest of the year.

Shares of LVMH have declined about 25 per cent since the start of 2026.

Still, Chris Gabaldon, CEO of Moët Hennessy North America, is optimistic that the company’s premium brands — including Belvedere vodka, Glenmorangie Scotch and Dom Pérignon Champagne — are well positioned even as consumers dial back drinking.

“Over three-quarters of our portfolio plays in the super-premium market,” he told CNN. “We’re seeing this movement towards quality, so we think we’re in a pretty good position to do that.”

Meanwhile, the other part of his unit’s name — Moët — is among its strongest sellers. The Champagne is “resonating across price points because people still want to celebrate and they still want to be out.”

A recent Financial Times report said that it could explore selling some alcohol brands, but Gabaldon thinks his lineup is in a “pretty good space,” crediting growth of its Whispering Angel rosé, Cloudy Bay wines and its various Champagne brands.

In the near term, the company is focusing on shoring up Hennessy’s dominance.

“The only thing we do know is that what Hennessy was a hundred years ago is probably not what it will be a hundred years from now,” he said.