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Time of India
20-05-2025
- Business
- Time of India
France's cognac producers weather climate change, tariffs
Vines for as far as the eye can see. Some 24 hectares (59 acres) belong to Alain Reboul, a 62-year-old, seventh-generation winemaker. His Earl du Bois Noble winery is one of the smaller ones in the region of France and is located around 100 kilometers (about 62 miles) north of the city of Bordeaux. Tired of too many ads? go ad free now Wine production is strictly regulated in the region, which is the biggest white wine region in France and home to at least 4,350 winemakers. Only grapes from the six areas, or crus, of the Cognac geographical indication can be used to make the brandy that is produced in the region and bears the same name. The largest market for cognac is the United States, whose President Donald Trump recently threatened to impose 200% tariffs on European spirits. The second-largest market is China, where President already imposed temporary anti-dumping measures on imports of brandy in the fall of 2024 in retaliation to the European Union's approval of duties on electric vehicles made in China. The alcohol can no longer be sold in Chinese duty-free stores. According to the French trade association, the Bureau National Interprofessionnel du Cognac (BNIC), exports to China have decreased by half, resulting in a loss of over €50 million (about $56 million) per month. The BNIC has appealed to the French government not to forget the approximately 70,000 jobs that depend directly and indirectly on cognac. 'Plant, plant, plant!' Along with a local winegrowers' union, the BNIC has recommended to winemakers that they get rid of some of their vines in order to save costs for machinery, fertilizers and pesticides. That's out of the question for Reboul, who has spent a large part of his career buying more land and planting more vines. "You have to plant them for 30 years, at least," said the tall, weather-beaten man. "For generations!" Shorter-term thinking has not paid off for his family in the past, Reboul said, adding that his father switched to red wine during the oil crisis and that it wasn't worth it. Just a few years ago, he said, the motto was "Plant, plant, plant!" The thirst for cognac seemed unquenchable. Tired of too many ads? go ad free now Despite the COVID-19 pandemic and the war in Ukraine, almost 213 million bottles were sold in 2022, a record year, according to the BNIC. Reboul said the current slump has been the greatest shock since the oil crisis. He has colleagues who have uprooted several hectares of vines, replacing them with olive trees or truffle plantations, but he said he will not do the same. "My philosophy won't change," he said, adding that there have always been crises. A part from Chinese and US duties, the Cognac region has also been affected by the loss of the important Russian market in the wake of the full-scale invasion of Ukraine. Climate change is also putting a strain on winemakers because grapes are becoming sweeter; for good cognac, they need a certain acidity. The grapes are also ripening earlier, increasing the risk of a harvest failure because of hail, frost or disease. Family-run businesses carry on tradition Reboul sells his entire yield to Hennessy, one of the oldest and best-known cognac producers. He manages his estate with the help of relatives and seasonal workers, and said he loves his job. Cassandre Allary runs her family business, the , with her brother. They have 26 employees and produce oak barrels and casks of all sizes for both wine and spirits. There are some 50 barrelmakers located between the cities of Cognac and Bordeaux, and their craft is recognized as part of the country's winemaking traditions. It takes a lot of knowledge and craft to make a barrel, Allary said. The wood, which is always oak, is first dried outdoors for many months so that the wind and rain bring out the tannins. Then the barrels are toasted and fitted with heads and hoops before being polished and deburred, or smoothed out. "The temperature [for toasting the wood] depends on the aromas that we want to tease out of the wood," she said. "We do this according to the client's wishes." Allary explained that if the wood is toasted at low heat, it releases coconut aromas, whereas a medium heat reveals notes of vanilla, mocha or cocoa. Regarding the current business climate, she said the small company, which used to supply only cognac distillers but diversified its portfolio in the 1990s, is running at full capacity this year, but orders are dwindling. Cognac houses founded by immigrants Almost all the 20,000 inhabitants in Cognac produce or market wine, cognac, barrels, glasses, bottles or labels. The brandy has enriched the region and particularly the town, which gives it its name. Cognac owes its global success largely to trade. The fact that it is distilled made it possible to export it to other countries. Several famous cognac houses, many of which now belong to larger corporations, were founded by immigrants, including Bache-Gabrielsen, Hennessy and . The the latter two, along with Courvoisier and , dominate about 90% of the market. Tapping into new markets A gallery of portraits hangs above drawers full of historic bottle labels in the lobby of the Maison Bache-Gabrielsen, which was founded in 1905 and is still owned by the family. The company produces around 1 million bottles a year, which is not much compared to more famous brands, but a lot considering there are only 23 employees. The wine is supplied by winegrowers like Reboul and is then turned into a high-proof "eau de vie" through double distillation. The brandy must then mature for at least two years in oak barrels so that it can absorb aromas from the wood. The different wines are then blended to produce the amber-colored end product. Jean-Philippe Bergier is the cellar master, blender and "nose" of Bache-Gabrielsen. He has worked there for 35 years, blending up to 15 distillates from all of the region's areas. He said certain grape varieties, which bring more acidity and once were only added in small proportions to a blend, are now in demand because of climate change. He said he has seen a number of trends come and go. Recently, Bache-Gabrielsen bottled a small batch of organic cognac in recycled bottles to test a new market segment. The company also wants to tap into new markets by producing cocktails, liqueurs and aperitifs. He said there is a lot of interest from young people about how cognac is made. Though they drink less alcohol than older generations, they are more interested in quality. And that's why he believes firmly in the future of cognac.
DW
19-05-2025
- Business
- DW
France's cognac producers weather climate change, tariffs – DW – 05/19/2025
Cognac is considered by many to be the best brandy in the world. But those who make it are under pressure from Chinese and US duties, as well as global warming — all of which are forcing them to rethink their approach. Vines for as far as the eye can see. Some 24 hectares (59 acres) belong to Alain Reboul, a 62-year-old, seventh-generation winemaker. His Earl du Bois Noble winery is one of the smaller ones in the Cognac region of France and is located around 100 kilometers (about 62 miles) north of the city of Bordeaux. Wine production is strictly regulated in the region, which is the biggest white wine region in France and home to at least 4,350 winemakers. Only grapes from the six areas, or crus, of the Cognac geographical indication can be used to make the brandy that is produced in the region and bears the same name. The largest market for cognac is the United States, whose President Donald Trump recently threatened to impose 200% tariffs on European spirits. The second-largest market is China, where President Xi Jinping already imposed temporary anti-dumping measures on imports of brandy in the fall of 2024 in retaliation to the European Union's approval of duties on electric vehicles made in China. The alcohol can no longer be sold in Chinese duty-free stores. Alain Reboul said there have always been crises, and that he will weather this one as well Image: M. Jordanova-Duda/DW According to the French trade association, the Bureau National Interprofessionnel du Cognac (BNIC), exports to China have decreased by half, resulting in a loss of over €50 million (about $56 million) per month. The BNIC has appealed to the French government not to forget the approximately 70,000 jobs that depend directly and indirectly on cognac. 'Plant, plant, plant!' Along with a local winegrowers' union, the BNIC has recommended to winemakers that they get rid of some of their vines in order to save costs for machinery, fertilizers and pesticides. That's out of the question for Reboul, who has spent a large part of his career buying more land and planting more vines. "You have to plant them for 30 years, at least," said the tall, weather-beaten man. "For generations!" Shorter-term thinking has not paid off for his family in the past, Reboul said, adding that his father switched to red wine during the oil crisis and that it wasn't worth it. Just a few years ago, he said, the motto was "Plant, plant, plant!" The thirst for cognac seemed unquenchable. Despite the COVID-19 pandemic and the war in Ukraine, almost 213 million bottles were sold in 2022, a record year, according to the BNIC. Cognac is considered one of the best brandies in the world by connoisseurs Image: Dreamstime/IMAGO Reboul said the current slump has been the greatest shock since the oil crisis. He has colleagues who have uprooted several hectares of vines, replacing them with olive trees or truffle plantations, but he said he will not do the same. "My philosophy won't change," he said, adding that there have always been crises. Apart from Chinese and US duties, the Cognac region has also been affected by the loss of the important Russian market in the wake of the full-scale invasion of Ukraine. Climate change is also putting a strain on winemakers because grapes are becoming sweeter; for good cognac, they need a certain acidity. The grapes are also ripening earlier, increasing the risk of a harvest failure because of hail, frost or disease. Family-run businesses carry on tradition Reboul sells his entire yield to Hennessy, one of the oldest and best-known cognac producers. He manages his estate with the help of relatives and seasonal workers, and said he loves his job. Cassandre Allary runs her family business, the Tonnellerie Allary, with her brother. They have 26 employees and produce oak barrels and casks of all sizes for both wine and spirits. There are some 50 barrelmakers located between the cities of Cognac and Bordeaux, and their craft is recognized as part of the country's winemaking traditions. It takes a lot of knowledge and craft to make a barrel, Allary said. The wood, which is always oak, is first dried outdoors for many months so that the wind and rain bring out the tannins. Then the barrels are toasted and fitted with heads and hoops before being polished and deburred, or smoothed out. "The temperature [for toasting the wood] depends on the aromas that we want to tease out of the wood," she said. "We do this according to the client's wishes." Cassandre Allary runs her barrelmaking company with her brother Image: M. Jordanova-Duda/DW Allary explained that if the wood is toasted at low heat, it releases coconut aromas, whereas a medium heat reveals notes of vanilla, mocha or cocoa. Regarding the current business climate, she said the small company, which used to supply only cognac distillers but diversified its portfolio in the 1990s, is running at full capacity this year, but orders are dwindling. Cognac houses founded by immigrants Almost all the 20,000 inhabitants in Cognac produce or market wine, cognac, barrels, glasses, bottles or labels. The brandy has enriched the region and particularly the town, which gives it its name. Cognac owes its global success largely to trade. The fact that it is distilled made it possible to export it to other countries. Several famous cognac houses, many of which now belong to larger corporations, were founded by immigrants, including Bache-Gabrielsen, Hennessy and Martell. The the latter two, along with Courvoisier and Remy Martin, dominate about 90% of the market. Tapping into new markets A gallery of portraits hangs above drawers full of historic bottle labels in the lobby of the Maison Bache-Gabrielsen, which was founded in 1905 and is still owned by the family. The company produces around 1 million bottles a year, which is not much compared to more famous brands, but a lot considering there are only 23 employees. The wine is supplied by winegrowers like Reboul and is then turned into a high-proof "eau de vie" through double distillation. The brandy must then mature for at least two years in oak barrels so that it can absorb aromas from the wood. The different wines are then blended to produce the amber-colored end product. Jean-Philippe Bergier has been making cognac for 35 years Image: M. Jordanova-Duda/DW Jean-Philippe Bergier is the cellar master, blender and "nose" of Bache-Gabrielsen. He has worked there for 35 years, blending up to 15 distillates from all of the region's areas. He said certain grape varieties, which bring more acidity and once were only added in small proportions to a blend, are now in demand because of climate change. He said he has seen a number of trends come and go. Recently, Bache-Gabrielsen bottled a small batch of organic cognac in recycled bottles to test a new market segment. The company also wants to tap into new markets by producing cocktails, liqueurs and aperitifs. He said there is a lot of interest from young people about how cognac is made. Though they drink less alcohol than older generations, they are more interested in quality. And that's why he believes firmly in the future of cognac. This article was originally written in German.
Free Malaysia Today
15-05-2025
- Business
- Free Malaysia Today
France-China talks fail to resolve cognac dispute, says minister
French finance minister Eric Lombard said the door remains open for further discussions. (EPA Images pic) PARIS : French finance minister Eric Lombard said on Thursday that talks with Chinese vice premier He Lifeng did not yield a solution to a trade dispute with China involving cognac, though he added that the door remained open for further discussions. China began an anti-dumping investigation into the European Union brandy in January amid heightened trade tensions between Beijing and Brussels. The probe was extended in April, giving EU exporters more time to avoid hefty Chinese penalties. The National Interprofessional Bureau of Cognac (BNIC), the cognac lobby, said in a statement that the absence of an agreement threatened to have 'catastrophic effects' on its industry and region, warning that every day that passed without a resolution was painful. 'We expect full mobilisation of our government to avoid the definitive imposition of these tariffs on July 5,' BNIC said. Separately, the French agriculture ministry said the two countries had signed two protocols to formalise an agreement to allow unaffected regions to continue poultry exports in the event of a bird flu outbreak in France and to provide access for French poultry and bird genetics to the Chinese market.
Yahoo
01-05-2025
- Business
- Yahoo
Woes surround Cognac and its ongoing slump requires urgent attention
The Cognac region was at its autumnal best: Indian summer sunshine, the dark green vine leaves contrasting with the bleached chalk soils of the pristine Grande Champagne vineyards, a bumper crop of grapes safely gathered in. And yet there was an unmistakably gloomy atmosphere around the place, which seemed out of kilter with a category that remained – to all appearances – on a post-pandemic tear of growth. This was October 2023 – only 18 months ago, and yet an age away in terms of the health of the Cognac category. What the Cognacais already knew, and the rest of us were later to find out, was that their world was beginning to turn. Warehouses groaning with stock in the US; China failing to pick up as expected following the easing of Covid-19 restrictions. In 2021, at the peak of the post-pandemic surge, 223.2m bottles of Cognac were shipped around the world. The number in 2022 – 212.5m bottles – was billed as a return to normality, being only 4m bottles shy of the pre-pandemic total of 216.5m bottles, recorded in 2019. Then came 2023: shipments totalling 165.3m bottles. That's a drop of 26% versus 2021, and 24% compared to 2019. Hardly surprising, then, that I encountered so much angst during that October visit to the region. Nonetheless, Cognac generic body the BNIC sought to reassure, citing temporary overstocking issues and predicting a return to pre-Covid shipment levels from 2024 onwards. Instead, however, 2024 saw Cognac treading water, with shipments barely rising to 166m bottles. Worse still, value dipped by more than 10% to fall below €3bn (in 2022, it stood at €3.9bn). That discrepancy between the volume and value trends is easily explained. While shipments of younger, typically VS Cognacs rose by 13.7% last year, VSOP shipments dropped by 8.6% and XO by 26.4%. (There's one reason for this slump – China – but we'll get to that in a moment.) This depressing dynamic has played out in the recent results announcements from the Cognac industry's biggest players. Moët Hennessy's first quarter Cognac and spirits revenues down 17% to €736m, thanks to 'soft demand' in China and the US: Rémy Cointreau's 2024/25 Cognac sales plummeting 21.9% to €611.8m. Rémy's figures are particularly dispiriting for a business that, even after recent declines, relies on Cognac for 62% of its revenue pool. The grim news coming out of China was leavened somewhat by a sharp recovery in the US, with the company tactically focusing on its entry-level VSOP product in a market that has long been a driver of volume rather than value. Rémy has endured two years of constantly declining revenues, something which may or may not have been a factor in the announcement that Eric Vallat was stepping down as CEO, with board chair Marie-Amelie de Leusse taking on the role on an interim basis while a replacement is found. We're told that Vallat will be pursuing 'a new professional project' from this summer, which is almost as vague as the traditional tropes employed in these announcements, such as 'personal reasons' or 'pursuing their career elsewhere'. The lack of succession planning suggests that one party or the other had concluded that enough was enough. It's fair to say that most of Cognac's recent travails have been beyond the industry's control. Covid-19, the artificial demand bubble that followed it, the delayed economic consequences of the pandemic – and now tariffs and trade wars. But these problems are accentuated by the category's over-reliance on two regions – NAFTA and the Far East – or rather two countries: the US and China. Even after the difficulties of the past couple of years, NAFTA accounted for 43% of global Cognac shipments in 2024, with the Far East at 29% (and Europe at 19%). The promising evolution of South Africa – now an 8m-bottle market – offers a tantalising glimpse of what might have been, had Cognac's four leading brands worked harder to develop new markets during the good years, as a hedge against times like these. Events in the US are deeply worrying, not just because of the delayed possibility of 20% tariffs (although a 10% tariff still applies in the meantime), but also because of the sheer uncertainty of dealing with the economic whims of the Trump administration. But the situation in China is more serious still. Following the Ministry of Commerce's (Mofcom) provisional decision to impose additional duties of 38.1% on Cognac (and Armagnac, and other EU brandies), its anti-dumping investigation has been extended until at least 5 July. This news prompted a joint response from the BNIC, Armagnac body the BNIA and FEVS (Fédération des Exportateurs de Vins et Spiritueux de France), following the visit of Jean-Noël Barrot, France's Minister of Foreign Affairs, to China on 27-28 March. You can feel the caution running through the text, as the bodies cautiously welcome the extension of the probe, as well as hints that the stockpiles of Cognac sitting in Chinese ports might be permitted to be sold in duty free (the channel has been technically suspended in China since the announcement of the provisional tariffs, with a major impact on trade). But then comes the kicker: 'However, in substance, these developments do not alter the situation for Cognac exporters, who have been subjected to provisional taxes in China since last October. For Cognac alone, these taxes have effectively excluded them from their second-largest market, resulting in a 72% drop in shipments, particularly for the month of February alone.' Because of the nature of the Cognac industry, dominated as it is by four huge brands – Hennessy, Martell, Rémy Martin and Courvoisier – it's easy to simply view the consequences of the situation in China (and the US) through a corporate prism. Organic revenue declines, profit margins slashed. What the BNIC/BNIA/FEVS joint press release hints at, however, is the deeper impact on an entire region. Urging all parties to resolve the China anti-dumping dispute, it continues: 'This additional period [until 5 July] must be used to find a diplomatic solution to remove our industry from this economic dispute, to which it is entirely unrelated, and which currently threatens to plunge it into a devastating and historic economic and social crisis.' Hyperbole? I'm not so sure. Beyond the glitzy bottles of Louis XIII and Richard Hennessy, the Cognac region is a complex, interdependent ecosystem that encompasses brand owners, distillers, winegrowers and more. For all the luxury, it's still an agricultural industry. There may be four dominant brands in Cognac, but there are also 4,360 winegrowers and distillers, 130 professional distillers, 14,500 direct jobs and 72,500 people whose livelihoods depend on people continuing to knock back Sidecars and sip glasses of XO. If the current slump isn't arrested, and arrested soon, there'll be a lot more than company share prices at stake. "Woes surround Cognac and its ongoing slump requires urgent attention" was originally created and published by Just Drinks, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.
Yahoo
01-04-2025
- Business
- Yahoo
Cognac, Armagnac's caution after French government China talks
Three French spirits trade bodies have warned the potential delay to China's anti-dumping probe of brandy does not change the ongoing negative impact of provisional taxes on Cognac and Armagnac producers. According to reports from Bloomberg and Reuters on Friday (28 March), during his trip, France's Foreign Minister Jean-Noël Barrot told journalists the completion of China's investigation into EU brandy products had been delayed three months. 'This measure should give us a few months' breathing space with the reopening of duty-free sales of Cognac and Armagnac, which represent a significant volume of sales for some brands,' he said in emailed comments to Bloomberg. In a joint statement yesterday (31 March), the Bureau National Interprofessionnel du Cognac (BNIC), Bureau National Interprofessionnel de l'Armagnac (BNIA) and Fédération des Exportateurs de Vins & Spiritueux de France (FEVS) said they had been "informed" about the outcomes of Barrot's visit to China. The three groups said they were aware of an announcement from Chinese authorities that final duties would not be brought into force on 5 April, which "potentially opens the door to another extension of the investigation" to 5 July. They also confirmed being informed about "the possibility of selling the Cognac currently stored in Chinese ports through the duty-free channel". The BNIC, BNIA and FEVS said Cognac and Armagnac industry members viewed the latest developments "positively", but added that "in substance, these developments do not alter the situation for Cognac exporters," give the provisional taxes they have faced on their imports to China since October. In October, China's commerce ministry imposed 'provisional dumping measures' on imports of EU-origin brandy. Since 11 October, companies importing products including brandy have had to pay a security deposit to Chinese authorities upon arrival. The sum of the deposit is equivalent to tariffs recommended by the commerce ministry in August following the release of a preliminary report of its investigation. "For Cognac alone, these taxes have effectively excluded them from their second-largest market, resulting in a 72% drop in shipments, particularly for the month of February 2025 alone," the trade bodies said in their joint statement. China launched its investigation last year after receiving complaints of brandy dumping from the China Liquor Industry Association. The move followed the EU's launch of an anti-subsidy investigation into Chinese electric vehicles in September 2023. The probe has been assessing dumping allegations made between 1 October 2022 and 30 September 2023 for EU brandy imported in containers of under 200 litres. While the BNIC, BNIA and FEVS await the outcome of future Franco-Chinese discussions, they stressed: "It is crucial that this initial sign of openness materialises through the formal extension of the investigation by three months, until July 5, 2025. This additional period must be used to find a diplomatic solution to remove our industry from this economic dispute, to which it is entirely unrelated, and which currently threatens to plunge it into a devastating and historic economic and social crisis." They added that "high-level" negotiations between France and China were due to take place on 15 May, and that the talks needed to focus on "this progress and confirm the visit of our Prime Minister to China to finalise the anticipated agreement that will bring an end to this unjust and unfounded procedure". "Cognac, Armagnac's caution after French government China talks" was originally created and published by Just Drinks, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.
