Asia and Europe drag down Cognac

Sharp declines in shipments to the Far East and Europe have brought an end to Cognac’s three consecutive years of record growth as the category posted a -10.2% value decline for 2013/14.

Figures released by the Bureau National Interprofessionnel du Cognac (BNIC) for the period from 1 August 2013 to 31 July 2014 showed total exports reached 155.5 million bottles with a market value of €2.2 billion.

A 3.1% volume increase in exports of VS (Very Special) category Cognac, accompanied by declines of -13.3% for VSOP (Very Special Old Pale) and -16.9% for older quality categories, meant that total value shipments fell more sharply than volume, which decreased by a more modest -6.7%.

In keeping with figures released by major Cognac producers, Asia showed the sharpest slowdown, largely due to the clampdown on luxury goods by China’s government. In total, the Far East showed a decrease of -20.9% in volume and -19.1% in value.

Despite this marked decline, the BNIC emphasised the “significant” quantity of 49.2m bottles that was shipped to this region in the last 12 months, with a total value of almost one billion euros.

In Europe, the BNIC attributed a -4.7% volume and -11.7% value decline to the ongoing effect of the global economic slowdown. However, it noted a 4.4% volume increase in shipments to Eastern Europe, which helped to boost total European sales to 41m bottles.

There was more positive news from the US, which at 54.1m bottles is Cognac’s largest export market. Hailing “some outstanding results” from this country, the BNIC reported a total uplift for North America of 6% volume and 3% value.

Continuing a trend shown by BNIC data released earlier this year, sub-Saharan Africa also put in a positive performance. Led largely by South Africa and Nigeria, exports to this region rose by 16.9% in volume and 20.1% in value.

Highlighting the almost even split of exports between its main markets of North America, the Far East and Europe, the BNIC emphasised the stability this helps to maintain.

“Cognac benefits from a strong position in global markets and is supported by famous, well known brands, all of which helps to ensure it has a firm and lasting foothold in its key markets,” the organisation assured.

“Those who work in the Cognac industry remain optimistic and confident in the development of the category and continue with their strategy of investment and development – both at home in the vineyards as well as in international markets.”