Thomas Cussons

Luxury Goods SpecialSinking spirits

The crisis in the Cognac world

To say that there is a crisis in the Cognac world is to understate the case. The word scarcely hints at the sorry spectacle that is unfolding. This is more than just a tale of falling sales and mounting stocks, though the extent of the industry’s financial woes are real enough. More than anything, the crisis looks set to alter dramatically the fabric of the Deux Charentes, the two dZpartements north of Bordeaux where Cognac is produced.

Cognac is more than just the economic heart of the Deux Charentes; it effectively is the Deux Charentes – and has been for several hundred years. It is by far the region’s largest business, directly employing 22,000 people and indirectly employing a further 33,000 out of a total population of 880,000. As significant, Cognac accounts for 25 per cent of all sales in the region and a whopping 70 per cent of its exports. And this in an area that remains among the poorest in France, with an unemployment rate obstinately stuck in double figures.

Of course, even in its current gloomy condition, Cognac is still big business. In 2000, exports topped eight billion francs, more than £800 million. They account for close on 20 per cent of the value of all French exports of wines and spirits, and a hefty two-thirds of all French exports of spirits.

But not even the most optimistic can deny that there has been a frightening downturn. Since 1990, sales have declined by almost a quarter, from a high of 155 million bottles a year to 119 million bottles last year. Even more to the point has been the collapse in the sales of quality or XO Cognacs, which have tumbled from 80 million bottles a year 12 years ago to just under 50 million last year. Given that a single bottle of XO Cognac can produce the same revenues as ten bottles of cheaper Cognacs, the impact has been inevitable.

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