Impossible to understand the Cognac region without a guide. Not a Small Red Book, nor a Green Guide but rather the Small Orange Leaflets regularly issued the BNIC, the Cognac National Board, which give the economic pulse of the “cognaçais”, the Cognac production area.

Because the whole area lives on a spirit IV. Not only the town of Cognac but two districts - Charente and Charente Maritime - live on a drip of the amber liquid.

Wine growers, distillers, brokers, workers and executives of merchant houses, of course; but also cooperages, cork and stoppers companies, bottle and label manufacturers, carriers… more than 50.000 people live for and by the cognacs.. This without taking into account the hotel which welcomes visitors or representatives of the Big Houses, nor the local car sellers who rub their hands when the sales of XO explode in China…

Everything here seems to depend more or less on the Cognac It is not only an impression: when the markets run out of steam, when the largest Cognac houses are taken in the swirls of reorganization and downsizing, the whole vineyard becomes feverish… or bloodless.

The sequoias hide the forest

Foreign markets have always been hectic about Cognacs

In 2005, the sales of Cognacs throughout the world represented a little more than 140 million bottles… including only 6 Million in France. 2006 has been a year of explosion, the BNIC announced approximately 152 Million bottles dispatched throughout the planet.

The big markets? North America, 40% of the exported cognacs, shoulder to shoulder with the European countries, but many eyes are staring at the eastern giants - China and Russia and at the Asian “hubs”, Singapore, Hong-Kong, where the local consumers have a passion for the most venerable Cognacs…and also the most expensive ones. This situation is not new. Cognac, for the last 300 years, has always been massively exported. However, a remote market, it is an evidence, is less accessible than a local market. And thus difficult to capture with limited means. Remote can also mean fragile. Newcomers in the trade remember the fall of the Asian markets in the Nineties, and are now delighted by the new passion of the Afro-Americans rappers for their bottles. But the older winemakers, heirs of generations of distillers, feel more cautious. They remember that an imperial blockade or a modern war of chicken can close borders. Or that nuclear tests at the other end of the world can induce a boycott of everything that represents the “French way of life”: wines, perfumes, foie gras and Cognac of course…The rise and fall of Cognac markets throughout history have helped some wise men to make a fortune but these ups and downs have also left here and there in the countryside some beautiful mansions, unfinished forever…

A concentration of powers

300 years ago, the stage has been set, and the roles distributed. A multitude of wine growers and home distillers, distilling to meet the demand of far less numerous merchants who, for their part, criss-cross the world to offer sophisticated elixirs to the jet-setters of the moment, as well as younger and simpler products designed for the mass of the “common” drinkers.

The first merchant houses dated back from the XVIth century, they had been founded by locals. But rapidly, a new generation of young foreigners arrived in the business and gained the upper hand They came from Northern Europe, and had close relationships with Dutch, Irish, or English importers and distributors… In the XVIIth and XVIIIth century, thanks to their entrepreneurship, Cognac became one of the most highly praised spirits of the world. Right from the beginning, Cognacs were created as an answer to foreign demand. Time has passed. Some Houses have had better roles to play, some have disappeared, some have become giants, brand new companies have been founded, some names have been totally forgotten.
But the economy has always been built on this tension: thousands of feet anchored in the chalky soil of Charentes, a handful of brands once consumed by the old father Karamazov, now sung by Busta Rhymes…

And this situation can last for long… Because in this context of remote and difficult markets, it is far easier for a small distiller to sell his raw spirits to the merchants than trying to make his own blends, bottle them and carry samples in his suitcase to the end of the earth.

And the houses who are already firmly implanted in a foreign country hold the best cards to keep and develop their market shares. Last,the icing on the cake: all the majors have been purchased by gigantic groups, with distributors everywhere, which increased even more their chances to master the markets.Thus, it is not a surprise if the most famous names are everything but start-ups..In Cognac, success is based on time and patience: the time necessary for the ageing of the precious old spirits

The “Grandes Maisons”(the big merchant houses)Hennessy, created by an Irish soldier in 1765, now part of LVMH group, is the mastodon of the place: it has sold more than 4 Millions cases in 2006, about 50 Million bottles; as much as the 3 other “big ones” altogether.

Remy-Martin, created in 1724, part of Remy Cointreau, the specialist of Grande and Petite Champagne 1,7 Millions cases

Martell, founded by a young man arriving from Jersey in 1715. Declining in the 90s, the company has constantly grown since it was purchased by Pernod Ricard in 2002: from 1,2 Million cases to1,7 Million cases last year.

And Courvoisier, which offices are in Jarnac, now a part of Fortune Brands.
As these four houses control 70% of the world markets … it means that only 30% are left for the 203 other merchants and the 507 home distillers that sell directly.

And the others...

The size and the ranking of the smaller companies is a mistery…it is said that the “charentais” like to keep secrets.

Some of them are still family businesses, such as Camus, 5th of the houses.The Camus family has always explored distant markets, from the Russia of the Czars to the modern China that won the heart of Cyril Camus. Some of them are purely merchants, such as Delamain, known for its old vintages. A few others, such as Frapin, a real “chateau” with a vineyard of more than 750 acres grow their grapes and distill their own wines.
And after the 20 medium-size houses, all the “bouilleurs de cru” who have the will and courage to create sell their own cognacs. A difficult exercise again, owing to the fact that French people are mad about…whiskies, and are not Cognac connoisseurs at all.
It is the reason why Kyle Jarrard, an American columnist and a Cognac lover, called Paul Giraud, one of the Grande Champagne small home distillers, “the last of the Mohicans”. I hope that Kyle is mistaken …

Quite happily, some Mohicans still resist…