After many years of crisis, Cognac is doing well, very well.
But a return to profits brings problems that would have seemed minor in the late 1990s, when bankruptcy threatened many family vineyards, diggers were pulling up vines, and the big four Cognac houses were laying people off instead of hiring.
The key question is whether the authorities should allow more Cognac vines to be planted to increase production, given the eight-year timescale between planting and significant production.
Members of the controlling Bureau National Interprofessionnel du Cognac (BNIC) started the decision process last month. “It is a complex process, codified in the Business Plan Cognac, where négociants say how much they think they will sell and the growers examine the plan and see if they think it is feasible without driving down prices,” said Christophe Forget, vice-president of the BNIC.
“It is still too early to say which side the coin will fall.”
Matters were bought to a head when some opportunistic vineyard owners, took advantage of a loophole in regulations which opened in 2016, and bought up unprofitable vineyards in the Loire region. They then pulled up the vines and planted the same acreage in the Cognac region, thus getting around strict quota rules set by the government and the BNIC.
When it came to light, it unleashed a wasp’s nest of emotion. First, the sight of uprooted vines piled into a heap in the Loire and then set alight with used engine oil caused uproar.
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Then in the Cognac region, young vineyard owners, using the art of political theatre, mounted “commando” expeditions on the properties of those deemed responsible for the “outrage” and planted large signs proclaiming ‘Ici niche un vautour’ (a vulture nests here). Events finally calmed down when the government promised to close the loophole and said the problem had been caused by the European Union not understanding the complexity of French grape growing.
Officially the Business Plan Cognac, agreed in 2012 by the BNIC, calls for limited growth in vineyards from the 75,000 hectares currently in production. This compares with 110,000 hectares in the late 1980s when the last sustained boom took place and whose overproduction is blamed for the depth of the last bust.
But the tension which caused the Loire loophole to be exploited is growing again as official figures show how well Cognac has recovered. The number of bottles exported rose 10% to 198 million, which in cash terms meant a rise of 14% to €3.15billion. Around 17,000 jobs depend on Cognac.
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Now the dispute is between growers and the négociants, who in Cognac both act as blenders, bottlers and sellers of finished Cognac, and as producers, buying raw wine for distilling, some already distilled eaux de vie to mature in oak barrels, and mature Cognac ready to be blended.
Négociants want the acreage devoted to Cognac to increase, especially as the relatively poor harvest last year, hit by late frost in April, has meant they will have to dig into their precious reserves in 2020, when the matured Cognac from 2017 hits the market.
Growers are more cautious, knowing vines planted this year will only produce significant wine for distilling in five years and after distilling will only be sold as Cognac two or three years later. A lot can happen in eight years, with, for example no-one knowing how sales of spirits between the EU and UK will be affected by Brexit.
Limited authorised planting has taken place, with 800 extra hectares planted in 2017, and 1,500 more expected this year.
Another problem affecting the sector is the perennial one of how to boost consumption in France, which accounts for just 4% of Cognac sold and where the market is declining.
Booming exports, especially to the US, where the drink gained popularity among rappers as an alternative to redneck whiskey have helped – but home support is still lacking.
Old Cognac from a very quiet new factory
Last year, more factories opened in France than closed for the first time in many years. One of the most notable new buildings is a €100million conditioning, bottling and dispatch centre built by Hennessy at Pont Neuf, in Charente, near Cognac.
Covering 30 hectares, the new factory meets the most recent ecological standards, using, for example, natural light where possible. Unusually for a bottling plant, it is very quiet, with working conditions and arrangements designed to cause as little environmental stress to the workers as possible. About 110 new jobs have been created and the investment by Hennessy (owned by the LVMH luxury goods conglomerate) reflects both the recent good times for Cognac and sends a signal to growers that it is okay for them to plant more
