Asbach Plans For An International Future

Asbach, one of Germany’s oldest and best known brandies, celebrates its 125^th anniversary this year. The family business has had great success in Germany, but reaching the same heights internationally is another challenge altogether.

To any tourist – and there are plenty of them each year – the town of Rüdesheim looks picture-perfect. Sitting along the river Rhein, the old town seems as though it has always existed. This year, one of Rüdesheim’s long-term residents, Asbach, is celebrating its 125th anniversary. But a long and successful history is no guarantee of a similarly successful future.

The brandy category in general has had a rough time over the past few years. A Chinese crackdown on extravagant gift-giving and banquets in 2012 kicked off a rocky period for luxury goods of all kinds, including high-quality brandies. Sales declined across 2014 and 2015, and even the major cognac producers had to sit up and take notice. The downturn made it clear that brandy and cognac makers had been too reliant on China’s lavish consumption habits to focus on broadening the appeal of their products.

Asbach and Cognac

Any crisis for cognac is, by definition, a crisis for high-quality brandy as well, but Asbach has a greater connection to cognac than many other brandies do. Company founder, Hugo Asbach, learned to distil wine from master distillers in France in the late 19th century. Like other brandy producers back then, cognac was the ideal he aspired to in his own distilling. And cognac was what he called the spirit he distilled, until the regional appellation rules in the Treaty of Versailles forbade the use of the word for anything produced outside the Cognac region in France. In fact, it was one of the first companies to begin using the new term Weinbrand to refer to its brandy.

Even today, the production process is very similar to that of cognac. “Distilling the wine in copper pot stills and aging the wine distillates in Limousin oak barrels for years are attributes for Asbach as well as for cognac,” says Asbach Managing Director, Christopher Dellee. Although he’s quick to point out that being free of the constraints placed on cognac producers means Asbach can use a greater variety of wines, and give its distillates a second rest after the blending process in German Spessart oak casks.

Asbach’s Acquisition

Those casks are a particular point of pride for Asbach, which is always working to strengthen its “solid German, regional roots,” according to Dr. Hubertine Underberg-Ruder, President of the Board at Underberg AG. Underberg, another long-standing German family company, bought Asbach in 2002. The company has made a habit of acquiring other family run businesses. Dr. Underberg-Ruder says they recognised in Asbach “a unique German premium brand [with] this rich and longstanding heritage.”

Since the acquisition, Asbach has doubled down on its strong local ties, moving the brandy distilling operations back to Rüdesheim, and investing further in the in-house cooperage which makes those Spessart oak casks. Asbach also has a series of jubilee events planned throughout the year, the majority of which are in Rüdesheim.

At the official anniversary ceremony in May, it was clear just how synonymous Asbach and Rüdesheim have become. Volker Mosler, the town mayor, gave a speech praising the distillery, and said that at the mention of Rüdesheim, people immediately think of Asbach. Afterwards, there was a celebratory lunch, which resembled an extended family reunion. Beyond the people from Asbach and Underberg, the guests included Rüdesheim locals and business owners from around Germany, all of whom had a long history of working with Asbach and Underberg. Guests said that personal touch was a hallmark of doing business with Underberg.

Thinking Local, Going Global

The focus on family history and local roots is also a part of Underberg’s strategy for promoting Asbach internationally. And it’s a strategy which may be about to pay off. The brandy market has seen sales growth again in the past 18 months. Cognac has bounced back, with a 3.6% increase in sales by volume last year. The ongoing austerity rules in China have kept sales low there, but the US and UK are picking up the slack. Many of the brandies which sold best in those markets were from smaller, regional distillers like Asbach. As Dellee observes, the demand for “hand-crafted and traditional, well rooted products, skilfully and carefully made, [has] been a growing trend.” Dr. Underberg-Ruder agrees, adding that authenticity and strong local heritage are increasingly important for spirit brands, as they’re something premium consumers look for.

To take full advantage of this trend, Asbach will need to become more visible outside its home market. While many Germans grew up with Asbach’s familiar advertising posters and slogans, the brand is less well known overseas: three quarters of the bottles produced each year are sold in Germany. Curiously, Asbach has built up a loyal following amongst foreign military personnel – mainly Brits – who were stationed in West Germany during the Cold War. These soldiers brought bottles back to their home countries, creating some demand for Asbach overseas. To a certain extent, that tradition is being continued by Rüdesheim’s many tourists. “More than 20,000 of them are coming each year to our distillery in Rüdesheim,” says Dr. Underberg-Ruder.

Asbach’s Key International Markets

Of course, it takes more than tourism and word-of-mouth marketing to break into a large international spirits market. Dr. Underberg-Ruder says Asbach, like other brandies, is especially focussed on the US and China, where the company has partnered with a local, family-run distributor. “The Chinese brand-building and route to market are highly different from here so we see this as a true learning opportunity and experience,” she says. So far, Asbach’s ultra-premium offering, Johann Wolfgang von Goethe Vintage Reserve 1952, is selling well in Asia, in places like Singapore, Hong Kong, and South Korea. No doubt Asbach is aiming to spread that popularity to China, too.

Asbach has a solid base to build from, and if the brandy market continues its upward trend, some real international opportunities will be up for grabs. But China especially is still causing headaches even for the bigger international brands.

Selling Rüdesheim and the romantic Rhine to Germans, as the company has done for so many years, isn’t the same as selling Germany to the rest of the world. Part of the challenge will be just getting consumers to look outside France and Spain for premium brandy. As Asbach takes bold steps into the international market, it’s clear the next 125 years hold a very different set of challenges.