After years of exuberant demand for Cognac, the industry is nursing a hangover, with shipments last year falling to 141 million bottles, the lowest level since 2009, according to BNIC, a trade group of producers. And consumption will drop about 2% annually through 2029, data tracker IWSR predicts. “We didn’t see this violent crisis coming,” says Thibaut Delrieu, managing director of Hine, a small brand that laid off more than a third of its workers last year and is pulling vines from about 10% of its 129 hectares. “We haven’t yet hit bottom.” Cognac producers are being shaken by a pronounced shift away from booze coupled with a cost-of-living squeeze that’s cut demand for luxury goods. Those difficulties have been compounded by rising tariffs in the US and China, which jointly account for more than half of total consumption of Cognac. Taken together, those factors threaten a business valued at €2.2 billion ($2.6 billion) a year for distilling giants Pernod Ricard, LVMH and Rémy Cointreau, and scores of smaller houses. And for France, the sales downturn could quickly become a crisis, as more than 70,000 jobs in the country are tied to the spirit’s production, BNIC estimates.
Cognac is made from a fermented grape juice that’s distilled twice to yield a spirit called eau-de-vie. That’s stored in barrels of oak from nearby forests for at least two years to develop flavor and color—with premium versions aged for a decade or more. Producers typically have enough supplies on hand to cover seven years of demand, but today that stands at a record 11 years, according to BNIC. Storing any more, says Delrieu, would require expanded facilities and more barrels. “The inventory situation is very tricky, because building new cellars is expensive,” he says. “Counterintuitively, that premium stock could lose value over time,” says Pierre-Eric Perrin, a partner at Eight Advisory, a financial consulting firm that works with Cognac makers. The decline in sales is particularly painful for Hennessy, owned by LVMH Moët Hennessy Louis Vuitton SE. The brand accounts for about half of all shipments, putting it far ahead of Rémy Martin, Martell and Courvoisier, which together make up a third of the market. Tt Hennessy the downturn was aggravated by the brand’s decision to raise prices following the Covid-19 pandemic, particularly in the US, a move that was “disconnected from reality and backfired with consumers,” Devers says. Hennessy declined to comment. And producers are counting on government help in mitigating the damage from a trade spat with China. The country in 2024 imposed hefty levies on brandy—most of which was Cognac—and withdrew the drink from duty-free shops after the European Union announced steep taxes on Chinese electric vehicles. China’s brandy imports declined almost 40%, to 22 million liters, in 2025, according to Chinese customs data. A July deal exempting most producers from the duties hasn’t returned shipments to the levels seen before the trade spat. BNIC will meet with French Agriculture Minister Annie Genevard on Feb. 3 to ask for her support in seeking compensation from the EU to make up for sales lost due to the Chinese tariffs.
For now, some in the industry are beginning to consider a more drastic measure: destroying inventory. “It’s something that’s obviously being mentioned,” says Anthony Brun, chairman of the Cognac winegrowers’ group UGVC. There’s huge resistance among producers, though, who have little incentive to dump spirits that theoretically only increase in price as they age.
Last year, BNIC ordered producers to cut their output of eau-de-vie per hectare to half what they’d made four years ago. And the group, which includes virtually all of the major producers, aims to shrink acreage under cultivation by 13%. “Cognac has been through worse crises in the past and survived,” says Florent Morillon, the head of BNIC.