Euro Worries are Actually Helping Cognac Sales

“Every cloud has a silver lining,” or so the saying goes.  And that’s certainly true when you take a look at what the concern over the European debt crisis and stability of the euro is doing to the sales of cognac.

98 per cent of all cognac produced is exported, and the largest market is that of the USA.  In the months since May the value of the euro has dropped some 13 per cent, and this has had a marked effect for the cognac houses.

US Dollar and Cognac Export

For example, Philippe Pichetto of Louis Royer Cognac has said that when their American clients pay in dollars and the euro is strong, then the company has to absorb the extra cost.  But now the euro has weakened it allows them to offset some of those costs.  At present it’s still early days, but he hinted that if the euro remains weakened for a period of over six months, then customers might begin to see some of this good fortune passed on with a reduction in the actual cost of their eaux-de-vie.

And of course, cognac is not the only market that is able to take advantage of this phenomenon, with all companies who export to the US rubbing their hands with glee at the chance of clawing back a few of their precious euros.

Sources: online.wsj.com, www.theaustralian.com.au