Cognac exports continue upward trend to reach record high

Cognac exports continued to grow in 2017 for a third consecutive year, reaching their highest ever levels in both volume and value, despite the April 2017 frosts, which according to the Bureau National Interprofessional du Cognac (BNIC) affected production less than expected.

Cognac exports grew for a third consecutive year in 2017

In total, around 197.4 million bottles of Cognac were exported from the region in 2017 – almost 98% of its total production – resulting in a turnover of €3.15 billion.

This represented growth of more than 10% in volume and 14% by value, according to statistics released this morning by the BNIC.

Growth was attributed to continuing strong performance across the North American Free Trade zone (NAFTA), signed by Canada, the United States and Mexico in January 1994.

A total of 86.1m bottles were exported to NAFTA zone in 2017, accounting for 43.6% of exports, with volumes rising 11.4 % and value 12.6% over the course of the year.

Of that total, 82.6m were exported specifically to the US, which remains Cognac’s largest market.

“The historic presence and ongoing investment of our brands in the United States make the strong performance of Cognac exports to this market possible,” explains Patrick Raguenaud, president of the Bureau National Interprofessional du Cognac (BNIC).

In comparison, exports to the Far East reached 56.9 million bottles, up 11.3% in volume and 18.4% in value, accounting for 28.8% of exports. China remains a key focus for Cognac, despite the difficulties faced in the past five years due to austerity measures and tightening rules in gift-giving, with 25.5m million bottles exported to the nation.

“This trend towards strong recovery illustrates the lasting appetite of the Chinese for Cognac, even in this period of market normalisation,” added Raguenaud.

Shipments to Europe also increased by 5.7% in volume and 8.7% in value, representing more than 41.6 million bottles and 21.1% of total exports.

Russia saw volumes increase by 32.7%m, “testifying to the Russian attraction to the Cognac category”, noted Raguenaud.

Other markets tipped for future growth include Africa and the Antipodes, with exports to these markets rising by 13.2% by volume and 17.3% in value. These new areas of opportunity represent 6.5% total volume exports, the equivalent of 12.8 million bottles.

In terms of style, VS Cognac accounted for half of all Cognac shipments, with volume growth of 8.6% and 15.4% in value. VSOP and older categories also continued their growth, increasing by 11.2% in volume and 14.3% respectively, and 11.1% and 17.1% in value.

“The great momentum we are experiencing today across all three categories can be explained by good results for Cognac in all of its markets, with varied consumption patterns,” said Raguenaud.

Turning toward to impact of last year’s April frosts, which affected large swathes of Europe, Cognac was not left unaffected, but will be tempered by the availability of the region’s climate reserve.

Volumes dropped to 88.95hl vol./ha compared with 101.94 hl vol/ha for the previous harvest. The organisation expects the 2017 harvest to yield around 635,000 hl AP, with losses offset by the region’s climate reserve, set up in 2008, which holds stocks of 184,000 hl AP.

“By creating a climatic reserve in years where there is the opportunity, the winegrower can compensate for a crop deficit,” said Christophe Forget, vice president of the BNIC. “This tool provides an additional guarantee for the sector. It allows us, to a certain extent, to guard against the risks of climate related hazards that we have seen increase in recent years.”