Woes surround Cognac and its ongoing slump requires urgent attention

Fiona Holland

Thu, May 1, 2025, 5:03 AM 6 min read

The Cognac region was at its autumnal best: Indian summer sunshine, the dark green vine leaves contrasting with the bleached chalk soils of the pristine Grande Champagne vineyards, a bumper crop of grapes safely gathered in. And yet there was an unmistakably gloomy atmosphere around the place, which seemed out of kilter with a category that remained – to all appearances – on a post-pandemic tear of growth.

This was October 2023 – only 18 months ago, and yet an age away in terms of the health of the Cognac category. What the Cognacais already knew, and the rest of us were later to find out, was that their world was beginning to turn. Warehouses groaning with stock in the US; China failing to pick up as expected following the easing of Covid-19 restrictions.

In 2021, at the peak of the post-pandemic surge, 223.2m bottles of Cognac were shipped around the world. The number in 2022 – 212.5m bottles – was billed as a return to normality, being only 4m bottles shy of the pre-pandemic total of 216.5m bottles, recorded in 2019.

Then came 2023: shipments totalling 165.3m bottles. That’s a drop of 26% versus 2021, and 24% compared to 2019. Hardly surprising, then, that I encountered so much angst during that October visit to the region. Nonetheless, Cognac generic body the BNIC sought to reassure, citing temporary overstocking issues and predicting a return to pre-Covid shipment levels from 2024 onwards.

Instead, however, 2024 saw Cognac treading water, with shipments barely rising to 166m bottles. Worse still, value dipped by more than 10% to fall below €3bn (in 2022, it stood at €3.9bn).

That discrepancy between the volume and value trends is easily explained. While shipments of younger, typically VS Cognacs rose by 13.7% last year, VSOP shipments dropped by 8.6% and XO by 26.4%. (There’s one reason for this slump – China – but we’ll get to that in a moment.)

This depressing dynamic has played out in the recent results announcements from the Cognac industry’s biggest players. Moët Hennessy’s first quarter Cognac and spirits revenues down 17% to €736m, thanks to “soft demand” in China and the US: Rémy Cointreau’s 2024/25 Cognac sales plummeting 21.9% to €611.8m.

Rémy’s figures are particularly dispiriting for a business that, even after recent declines, relies on Cognac for 62% of its revenue pool. The grim news coming out of China was leavened somewhat by a sharp recovery in the US, with the company tactically focusing on its entry-level VSOP product in a market that has long been a driver of volume rather than value.

Rémy has endured two years of constantly declining revenues, something which may or may not have been a factor in the announcement that Eric Vallat was stepping down as CEO, with board chair Marie-Amelie de Leusse taking on the role on an interim basis while a replacement is found.