For the fourth straight year, exports of Cognac have continued their steady rise, with producers celebrating an increase of 8.2% in volume and 5.4% in value in the year ending July 31, 2018.
Cognac now represents nearly a quarter of the total value of all French wine and spirits exports.
A record 205.9 million bottles were shipped between August 2017 and July 2018, achieving 3.2 billion euros in revenue.
The United States remains the leading market, with 86.5 million bottles shipped during the period, while the east Asian market continues to grow, with 60.9 million bottles shipped (and increase of 13.5% in volume and 12.4% in value).
Patrick Raguenaud, President of the Bureau National Interprofessionnel du Cognac (BNIC), believes there is significant potential for development in the rest of the world, particularly South Africa, Vietnam, Oceania and the Caribbean. Exports to these markets rose by 12.2% in volume and 5.3% in value. All together, these markets represent more than 6.7% of total exports, or nearly 13.9 million bottles.
The BNIC is the consultative and decision-making body for the 4300 growers, 110 distillers and 280 négociants of the Cognac appellation.
Exports increase for all categories: V.S., V.S.O.P. and Hors d’Âge
Representing 50% of total volume, the V.S., V.S.O.P. and older categories—including Napoléon, X.O. and Hors d’Âge—continue to play a prominent role in Cognac’s strong performance. The success of V.S. (minimum two years ageing) cognac continues to be driven by the North American market – which accounts for half of all cognac shipments – growing in volume by 6% and in value by 4.1%.
Representing a little less than 40% of the production, V.S.O.P. (minimum four years ageing) shipments increased by 10% in volume and 2.1% in value. Napoléon (minimum six years ageing), X.O. and Hors d’Âge (minimum 10 years ageing, respectively) are also experiencing significant growth with a rise of 12.4% in volume and 10.3% in value, thanks to strong results in East Asia.
Supplies under threat
According to Reuters, Hennessy owns around half of the global Cognac market.
However, the category’s booming growth is under strain due to the lack of supply Hennessy has in reserve plus the effect of hail damage the region suffered earlier this year.
Last month, the wine & spirits arm of LVMH, Moet Hennessy, announced a solid jump in half-year sales, with strong volumes growth for Hennessy Cognac (+3%), which came despite supply constraints that the company has been highlighting for the past 12 months.
Hennessy has been planting more vines, but new vineyards will take up to six years to start producing usable grapes – even Hennessy’s youngest Cognac is aged between two and eight years.
It’s expected the shortage will really begin to bite in late 2019 to early 2020. Experts are suggesting that Cognac lovers stock up on more expensive bottles of Hennessy, such as the V.S.O.P., the X.O. and Hennessy Black.