COGNAC INDUSTRY
FACES UNPRECEDENTED
CHALLENGES AMID
GLOBAL PRESSURES
Sanghamitra Banik
winesutra
Founder and CEO,
Winesutra
The prestigious Cognac industry, renowned for producing what many consider the finest brandy in the world, is facing mounting challenges. From trade restrictions imposed by China and the United States to the ever-growing threat of climate change, producers in the Cognac region are being forced to adapt swiftly to safeguard their heritage and economic stability.
Trade Tensions and Economic Pressures
Cognac production is meticulously regulated, with only grapes from six designated areas eligible for use in crafting the renowned brandy. The industry is vital to France’s economy, employing approximately 70,000 people directly and indirectly. However, external factors are now threatening its prosperity.
Cognac production is meticulously regulated, with only grapes from six designated areas eligible for use in crafting the renowned brandy. The industry is vital to France’s economy, employing approximately 70,000 people directly and indirectly. However, external factors are now threatening its prosperity.
The United States, Cognac’s largest market, has faced uncertainty after former President Donald Trump threatened to impose 200 percent tariffs on European spirits. Meanwhile, in China – Cognac’s second-largest market – President Xi Jinping initiated temporary anti-dumping measures against imported brandy in retaliation for European duties on Chinese electric vehicles. These restrictions have led to a dramatic 50 percent drop in exports to China, costing the industry over €50 million per month, according to the Bureau National Interprofessionnel du Cognac (BNIC). Furthermore, the Russian market, once a significant consumer of Cognac, has largely disappeared following geopolitical shifts triggered by the war in Ukraine.
Recent figures show that Cognac exports fell by 10.6 percent in value in 2024, with total shipments dropping to €3 billion. However, the volume of Cognac exported rose slightly by 0.4 percent, reaching 166 million bottles.
The discrepancy between volume and value is attributed to a 13.7 percent increase in shipments of younger Cognacs, while VSOP and XO expressions declined by 8.6 percent and 26.4 percent, respectively.
Climate Change Alters Production
Beyond trade disputes, winemakers are also grappling with the repercussions of climate change. Rising temperatures are affecting the acidity levels of grapes, which are critical to Cognac’s distinct profile. Earlier ripening increases the risk of harvest failures due to frost, hail, or disease. With shifting climate conditions, producers are required to reconsider their grape varietals and cultivation strategies.
Beyond trade disputes, winemakers are also grappling with the repercussions of climate change. Rising temperatures are affecting the acidity levels of grapes, which are critical to Cognac’s distinct profile. Earlier ripening increases the risk of harvest failures due to frost, hail, or disease. With shifting climate conditions, producers are required to reconsider their grape varietals and cultivation strategies.
Jean-Philippe Bergier, cellar master at Maison Bache-Gabrielsen, noted, “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.”
Adapting for the Future
Despite the challenges, some industry leaders remain optimistic. The BNIC and local winemakers’ unions have advised producers to cut back on vineyard expansion to reduce costs associated with machinery and pesticides. Yet, a longtime grower refuses to follow this trend, having spent years expanding his vineyards during Cognac’s peak demand. The region has long thrived due to its ability to adapt. Many of its most prominent Cognac houses – such as Hennessy, Martell, Courvoisier, and Rémy Martin – were founded by immigrants and have grown into global empires, controlling 90 percent of the market.
Despite the challenges, some industry leaders remain optimistic. The BNIC and local winemakers’ unions have advised producers to cut back on vineyard expansion to reduce costs associated with machinery and pesticides. Yet, a longtime grower refuses to follow this trend, having spent years expanding his vineyards during Cognac’s peak demand. The region has long thrived due to its ability to adapt. Many of its most prominent Cognac houses – such as Hennessy, Martell, Courvoisier, and Rémy Martin – were founded by immigrants and have grown into global empires, controlling 90 percent of the market.
At Maison Bache-Gabrielsen, cellar master
Jean-Philippe Bergier is optimistic about
Cognac’s future. With over 35 years of experience
blending distillates, he notes a rising interest in
quality spirits among younger consumers. To tap
into new markets, Bache-Gabrielsen has released
organic Cognac in recycled bottles and explored
new product lines, including cocktails and
aperitifs. The global Cognac market is projected
to grow steadily, reaching USD 4.5 billion in 2025,
climbing to USD 5.87 billion by 2033 at a CAGR
of about 3.73 percent. This growth is driven by
increasing demand for premium spirits,
sustainability efforts, and the rising popularity of
cocktail culture.
While the industry faces substantial hurdles, its long tradition of resilience and innovation suggests Cognac will continue to evolve, finding new opportunities even in uncertain times.
Expanding Global Footprint
As Cognac producers navigate evolving trade landscapes, emerging markets are set to play a crucial role in the industry’s future. Countries such as India, Africa, and Latin America are expected to ramp up imports in 2025, driven by targeted marketing efforts from French producers. While these regions may not yet rival the dominance of the U.S. or China, they offer valuable opportunities for incremental growth.
As Cognac producers navigate evolving trade landscapes, emerging markets are set to play a crucial role in the industry’s future. Countries such as India, Africa, and Latin America are expected to ramp up imports in 2025, driven by targeted marketing efforts from French producers. While these regions may not yet rival the dominance of the U.S. or China, they offer valuable opportunities for incremental growth.
At the same time, product innovation is reshaping Cognac’s appeal. From ready-to-drink Cognac-based cocktails to versatile blends designed for modern mixology, brands are adapting to attract younger consumers and broaden their global reach. The global cocktail renaissance shows no signs of slowing, with timeless favorites like the Sidecar and innovative craft creations driving demand for premium Cognac in bars worldwide – a trend poised to persist through 2025.
As 2025 unfolds, the Cognac industry is laying the groundwork for sustained growth. With a stable and optimistic outlook, the sector is navigating challenges while gearing up for its next chapter – driven by sustainability, innovation, and the exploration of new markets and new opportunities.
Despite steep taxation, Cognac has secured its place in India’s premium spirits landscape, standing as a symbol of luxury and craftsmanship. While whisky and rum remain dominant, Cognac continues to captivate connoisseurs and affluent consumers, drawn to its refined heritage and sophistication.
Strategic promotional efforts – including digital campaigns, influencer collaborations, and exclusive tastings have elevated its visibility, with leading houses like Rémy Martin and Hennessy spearheading engagement initiatives. However, high costs and limited outreach have kept broader adoption at bay, as Indian consumers traditionally lean toward bold, full-bodied spirits, contrasting with Cognac’s delicate and nuanced character.
Yet, the Indian market holds promise, particularly among urban consumers seeking elevated, premium experiences. Expanding its positioning beyond post-dinner indulgence through targeted education and innovative marketing strategies could be key to unlocking Cognac’s next phase of growth in India.
While the industry faces substantial hurdles, its long tradition of resilience and innovation suggests Cognac will continue to evolve, finding new opportunities even in uncertain times.
