Category: The History of Cognac

The end of World War II  was followed by approaching 30 years of growing prosperity. The newly formed BNIC started to improve the relationship between growers and merchants and was in turn lubricated. The biggest changes were in the structure of the biggest firms.

In 1947 the relationship between Martell and Hennessey came to and end when they failed to renew their agreement. Martell remained independent, but in 1971 Hennessey merged with the champagne firm of Moët & Chandon. The big two became the big four through the growth of Courvoisier and Rémy Martin. The firm of Courvoisier was established in the late 18^th century and it’s name became synonymous with the Napoleon hat – a representative of the firm once said that there was more than a thousand originals scattered around the world. Courvoisier was taken over in 1964 by Hiram Walker, who were themselves taken over in 1986 by Allied Lyons. Remy Martin was able to grow without the aid of outside capital, selling their cognacs only from the Champagnes.

In the post war euphoria production had greatly increased. Whilst the area of land planted with vines was still less than half of that reached in the 1870s before Phylloxera, viticultural techniques had so improved that by 1973 production had  reached nearly double of that a hundred years earlier. Around this time production levels stood at 264 million bottles, but as sales dropped considerably due to the oil crisis, this was more than twice what was being sold.

Substantial tax increases in 1983 had turned the shippers to rely on export markets. Help was on hand in the form of the Chinese, whose beliefs in the medicinal and status related benefits of cognac meant they were prepared to spend heavily to gain access to the products. By 1988 sales to Hong Kong reached more than 17 million bottles, most of which was shipped across the borders into China in clandestine operations giving serious concern to the authorities.

During the difficult years the big houses cut back their offtake from the growers, which caused serious financial difficulties for many, even driving some out of business. In some ways this later proved to be a benefit, since many started to sell their cognacs under their own name, a move which has provided many more brandies of much higher quality. The growth in the markets led to foreign companies buying established names. Otard went to Martini and Louis Royer was sold to the Japanese, whilst the Candian firm Seagrams bought Martell. The Americans now hold the top spot with more than 50 million bottles being shipped every year. Britain is in third place after Singapore with sales of around 13 million bottles.

When we talk about cognac, little thought is given to what we are talking about, or indeed what the definitions of cognacs really are. The battle against imitation cognacs was largely settled by legislation in 1905 and reinforced in 1929 by the special Acquit Jaune d’Or, the gold coloured certificate of origin that accompanies every load of cognac on the highway.

The Martell/Hennessey pact created both stability and unrest amongst the producers who were offered custom to maintain their business, but at the same time restricted in what they made and supplied. During the war a well known grower Pierre Verneuil and Maurice Hennessey followed the example of some of the merchants and a few growers to form what emerged after the war as Cognacs governing body, the Bureau National Interprofessionel du Cognac.

The BNIC acquired a great deal of de facto independence from the government in the formulation and supervision of the rules that govern cognac, most of which had been laid down before the war. They also took over the role previously performed by Martell and Hennessey, of deciding the price of new brandies from the various crus. The region had been divided into crus in the 1930’s as a consequence of the system of Appellation d’Origine Contrôllée envisaged in the original statute protecting regional names.

The introduction of new vines from America created large financial problems for the brandy industry, since the cost of the vines was largely prohibitive, especially to the very small producers and they simply went out of business. This crisis was caused not just by the cost of new vines, but also by the dwindling stocks of old cognacs that could be sold. And the problems got worse. After World War 1 came prohibition in the United States, regulatory state monopolies in Canada and Scandinavia and crippling taxes in Britain. The outlook was so bad  that in 1922 Martell and Hennessey made a 25 year pact to work together, taking shares in each other’s firms and effectively carving up the worlds markets between them.

Ironically it was the German Occupation of 1940-45 which provided the springboard for post war cooperation and prosperity in Cognac. Whilst the town was occupied, the commander Herr Klaebisc was a sympathetic figure. His family had controlled the well known firm of Merkow, who had been working in the lucrative trade through the Hanseatic ports with Scandinavia and Eastern Europe. Klaebisch tried to minimise the disturbance to the Cognaçaise, although they had to provide the Germans with enormous quantity of brandies. The Cognaçaise cheated by shipping lot of spirit made from root vegetables, thus preserving their stocks of old and real cognacs.

The defeat of Napoleon in 1815 was a great relief to the Cognacais. In the following decades the town burst beyond its medieval walls and the new rich merchants such as Otard and Dupuy were able to show their wealth with large houses built in the woods around Cognac. Even so, Martell and Hennessy retained their pre-eminence and most crucially were able to set the process for which the growers would sell their brandies to the merchants. They formed hereditary relationships that were governed not by contract, but by the habit of regularly trading, which had become a style of the people in the area. The merchants’ position was strengthened in 1857 by a new law which enabled them to register their trademarks. Previously, most cognacs, especially in Britain had been sold under the merchants own names who had imported them in casks.

In 1861-2 a brief period of glory emerged when the customs duties were reduced by the British and sales tripled in 15 years to 450,000 hectolitres (65 million bottles) annually.  From Latin America to Tsarist Russia, cognac became the fashionable spirit. The Charente became the biggest vineyard in France and thousands of acres of marginal land were planted with vines to cope with the new found demand in brandy.

But in 1871 the region was struck down with the dreaded Phylloxera vastatrix, a yellow beetle imported from the New World. The beetle feed on the roots of the vine, causing fungal infection and root deformation that eventually killed the plant .

The independence enjoyed by many of the growers, especially in the Champagnes, came to and end as the Phylloxera vastatrix beetle quickly killed off most of the vines. The survival of the brandy industry became a real issue during the 20 or so years it took to replant with Phylloxera resistant vines. Many growers decided to change crops to cereals as a means of paying the bills. It probably took more than 10 years to find a vine with a suitable rootstock that suited the chalky conditions of the Charente. It was in the 1880’s that a source was found by T V Munson, who lived in Texas near the Red River.

The Phylloxera plague changed the industry for good, and it was the larger well financed merchants who got the upper hand. Whilst could have exploited the growers by buying up the their land at very low prices, instead their exploitation was of a longer term. They lead the way offering vines grafted onto phylloxera resistant root stock, advice and fertilizer. This philosophy worked well for the biggest merchants, since it created a high level of allegiance from the growers who became dependant on merchants to sell their eaux de vie.

There were other struggles, though mainly as a result of fraud that had besmirched the good name of Cognac during the years of shortage. This was largely settled by legislation in 1905 and reinforced in 1929 by the special Acquit Jaune d’Or, the gold coloured certificate of origin which accompanies every load of cognac leaving the Charente region to its customers around the world.

Heavy duties on brandies in Britain led to lively smuggling traffic throughout the century. In Rudyard Kiplings words, Brandy for the Parson (together with the other highly taxed item), Baccy for the clerk. In the late eighteenth century, Adam Smith concluded that smugglers were the biggest importers of French goods into Britain.

By the end of the eighteenth century cognacs were being stored in oak casks for longer periods and the outbreak of war in 1756 actually helped the situation. The Market was big and every year 200,000 barriquess de vin propres à brûler, from which emerged 13,400 pipes, (each of 3 barriques or about 600litres), adding up to 8 million litres of eau de vie.

Getting these brandies into Britain created great difficulties because of the war, so they had to be shipped over land through Holland by cart, and this meant they were in casks for greater period of time. In addition, the casks were being stored, and in 1780 Richard Hennessey noted that shrewd operators were buying up a years supply, keeping them for a year, befor selling them as “Old Brandies”.

By the 1790’s both Martell and Hennessey had established themselves and some further names had also come onto the scene, such as Otard Dupuy, two growers who had set up comfortable stocks, Thomas Hine, the descendant of a Dorset family and Ransom and James Delamain, whose son Jacques set up by himself by marrying the daughter of Isaac Ransom. Paul Roullet and Philippe Augier completed a trio by also marrying a Ransom.

The outbreak of Total war failed to put a stop to sales of brandies, partly due to a drop in price, partly due to  the British Minister Sir John Nichol a declaring “the need for a little wine and French Brandy”.