What a difference a few years make. It was 14 years ago that the grape growers of Cognac were in despair, blockading the city and doing everything they could because of overproduction ruining their livelihoods. And a decade ago was the beginning of the crisis that saw so many succumb to the global downturn.
However, today the problem is very different. Following the almost meteoric rise in the popularity of cognac, there’s simply not enough eaux-de-vie to go round. The 75,000 hectares of AOC designated cognac vineyards can’t keep up with demand.
We reported last week that Bernard Pellion, CEO of Hennessy, bravely broached this subject at the Espace 3000 Cognac meeting, saying that “at some point we will seriously have to talk about the expansion of the planting areas.”
Jerome Royer, of Louis Royer Cognac, went a step further, saying that a further 7,000 to 8,000 hectares were needed to ensure future production in the long term. He also brought attention to the fact that after the crisis of 1998, 4,607 hectares were lost and only 1,796 were replanted. However, he made it very clear that they were still completely opposed to full liberalisation, despite what Brussels might be pushing for.
Since 2004, cognac sales have exploded. 162 million bottles were purchased worldwide last year, and the floodgates show no signs of closing. This demand is making it very difficult to put aside the raw materials for 10 years or more in order to produce XO qualities and older that the Chinese are so desperate for. Royer says that worryingly there are now virtually no stocks of old eaux-de-vie. And for the little that is left, there are a great many potential buyers chasing to buy it up.
Phillipe Coste, CEO of Meukow, mirrors this concern. His company needs to purchase 10,000 hectolitres of eaux-de-vie per year, and for the past three years has been unable to do so. He states that the company is about 30 per cent down. Consequently the amount of sales is finite and leaves room for other spirits.
Lionel Breton, CEO of the Cognac and Champagne division of Pernod Ricard says that the two major questions that need to be addressed to ensure the healthy future of the cognac industry are, ‘how to maintain the vineyard,’ and ‘how to extend the area of the vineyard.’
Because of past events, it seems understandable that many growers are hesitant to re-plant defunct vineyards. Many don’t agree that the current area is unable to produce enough to meet demand, saying that they can supply up to 800,000 hectolitres on an annual basis. The last time there was major replanting of the Cognac vineyards commenced back in 1968, and saw the area grw to nearly 100,000 hectares by 1976. This was a monumental disaster, and one that the wine growers have not forgotten.
And so the debate rages on, with the leading names in cognac production battling to come up with the ideal solution. This might include growers being provided with 10 year contracts to assure them of a guaranteed income even if the market does take a downturn.
Whatever happens, it’s something that can’t be solved overnight. And one that’s sure to continue to provoke many more heated discussions in the immediate future.