Crisis in China – Not Enough Cognac for Customers Orders

Cognac distributors in China are failing to obtain sufficient stocks to fulfill demand. Many producers in Cognac are under pressure to supply valuable stocks to major negoçiants for blending in VSOP, XO blends. The shortage of supply is forcing prices up and leading to higher costs of new cognacs. Thousands of distillers all over the region are being asked to supply even younger cognacs for blending, with inevitable loss of quality. Industry body the Bureau National Interprofessionel du Cognac (BNIC) said more than five bottles were sold every second in 2011, the total number of bottles sold rose by 6.4% to 162.9 million.

The Far East, which accounted for more than one-third of demand, was the biggest and fastest-growing market with volumes up 14.4%. Sales in China alone rose by 20% the BNIC figures reveal. Growth in Europe was more modest, with the region’s volume sales edging up by 0.4% to 46.9m bottles, while demand in North America rose 3.2% to 50.8m bottles.

Speaking to Reuters, Rémy Cointreau chief executive Jean-Marie Laborde spoke of his optimism for the coming year and his belief that the recovering US market, coupled with the rapid growth in Asia, will help counteract the continuing economic struggles in Europe. Laborde said that sales in the October-December period in particular had exceeded expectations, mainly due to increased Cognac shipments ahead of the Chinese New year. Is big brand optimism good for cognac? Certainly not for quality!