Cognac keeps going up (and up and up and…)

magnus3In the news this morning:

The Bureau National du Cognac (BNIC) said yesterday that demand for Cognac from the Asian consumers has continued to reach record levels. The luxury spirit’s global sales went up during 2012 by a substantial 3.2%

Exports of Cognac to Asia increased by 62.6 million bottles, 7.5% in volume, during the year.

Demand doesn't show any signs of slowing, with growth up by a whoping 12.1% in January and February of this year.

VSOP blend presented the highest growth, up 3.8% in volume and 13.1% in value (that means that prices also keep going north!) since the beginning of the year.

Soaring demand for Cognac from around the world has prompted the largest producers to increase their stock.

In December 2012 Rémy Cointreau announced the buyout of Cognac Larsen, an independent producer with a large range of eaux-de-vie.

Meanwhile, Pernod Ricard announced in February 2013 it would purchase Le Maine au Bois SAS, to bolster its Martell portfolio. Martell, particularly well established in Asia, saw its sales increase by 25% in the 2011/12 financial year.

Now, a few points that the Bureau, that oh so deliciously French bureaucratic outfit, didn’t see fit to talk about…

First, about the Asian markets: the contents of 8 out of 10 bottles sold as Cognac in China are anything but Cognac. They are fakes. In the best cases, it's some sort of brandy, sometimes even produced in France, and in the worst case some sort of God knows what local produce from China itself, Vietnam or Laos.

Second, some Chinese conglomerates are getting into the production of Cognac, buying small Cognac houses (Croizet, for instance) and some fear that, more than anything else,  they are buying the labels and the ability to call Cognac, legally Cognac, their products. Is it possible that some of the Chinese buyers abuse their privileged position in their home market? Time will tell.

Thirdly, we are seeing with Cognac an impressive example of how huge out-of-the-blue demand surge in some parts of the world, like the one from Asia these days, can go exponential in a very short period of time and create a spin-off demand turmoil across the global market. My friends, our world is shrinking by the day.


I had P.U. for dinner. He's an jet pilot and a Cognac lover. The evenings are quite cool this year and we decided to share a very serious XO Grand Cru by François Voyer, an extremely complex Grande Champagne chef-d'oeuvre. We had a long and pleasant conversation at the veranda enjoying the breeze and the sound of the waves in the distance.