As we’ve been reporting over the past year or so, the sales of cognac – especially from the ‘big four’ cognac houses – are continuing to rise.
Of course, whilst this is good thing, it also allows a different problem to rear its ugly head, and that is the one of supply and demand. For as sales increase, so does the need for the raw products, cellars need to be filled up with cognac in order to age – in other words, the grapes and the resulting wine.
With this year proving a record high, the hunt for more and more produce is gaining momentum with all the trading houses. And with market leader, Hennessy, aiming to double its sales by the year 2020, closely followed by everyone else, this is starting to create a small panic in the land of eaux-de-vie.
There have been rumblings of traders wishing to raid the reserve stocks – a recent creation from 2010 that allows the houses to replenish their older stocks of cognacs. However, Monday just gone has seen the BNIC issue a warning over this, saying that if these reserves are used for any other reason than that for which it’s intended, then this utility will be suspended.
Because of this increased demand, prices of raw eaux-de-vie still available on the free market are rising fast. Something which, of course, is great news for the growers. However, voices in the industry are making some noise to err on the side of caution. People such as Phillipe Coste of Meukow, and Jerome Royer, of Louis Royer cognac are warning of the dangers of the industry moving dangerously close to a monopoly of the four big cognac houses. If this happens, then the danger is that the smaller houses will become unable to compete – which might be already the case. After all, more and more smaller cognac houses, family companies, have to close because the big houses suck air out of the business.
Even Jean-Marc Girardeau, of Camus Cognac – the world’s number 5 selling cognac, is calling for everyone to keep things in perspective. He says that too much speculation and buying is a hazardous path to follow. The industry needs to ensure a good balance between both market destinations and product quality. And whilst the prices are rising, all the producers need to take care that this increase is kept at a sustainable level.