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Secrets of cognac production

Secrets of cognac production

The Cognac sector is based on a very specific terroir and territory. With more than 280 trading houses of various sizes and more than 4,300 farms, it benefits from a favorable economic dynamic, driven by positive local effects, which testify to the capacity of the region to constitute a resource for the sector. The importance of the history and the construction, over a long period of time, of the know-how and knowledge accumulated by the local actors are explanatory factors. Read the article written by Emmanuel Nadaud, in “l’incroyable saga du Cognac” published by the Revue des Deux Mondes.

The Cognac sector includes several key industrial sectors. The heart of the sector with the trading houses, the wine growers and the distillers is surrounded by a set of related activities: the packaging and marketing of spirits (production of bottles, production of cartons and industrial packaging), the activities of finishing and enhancing the value of products and brands (decoration on glass, corking, production of labels, small packaging activities, design, mixology) and the activities linked to viticulture (production of agricultural equipment, boiler making, cooperage). 

Entrance porch, © MG

Entrance porch, © MG

The demand for quality and an orientation towards high-end products

Cognac is a top-of-the-range product that is based on the region’s winegrowing and trading tradition as well as on the mobilization of age-old know-how that meets the needs of the industry: vine cultivation, distillation and aging of eaux-de-vie, blending and marketing. The requirement for quality is anchored in the practice of the actors beyond the only producers of the Charente brandy. It is attached to a strict framework for the production of Cognac, the Cognac Geographical Indication (GI) exist since the 1930s, guaranteeing the high standards and quality of Charentais brandy. The respect of the specifications, and consequently the respect of the production process, has allowed its success and accompanied its recognition as a high-quality product in the world.

An export-oriented territory with a sense of commerce 

Cognac is a product oriented towards international markets (98% of sales, of which nearly half are to the United States). This export orientation is part of the region’s historical trading tradition. The wine trade is a historical activity of the Charente Valley. The Cognac basin has created a mentality that is conducive to trade which has endured over time. Cognac is a product born of the will of foreign traders (the Dutch in the 16th century) and not of the producers. Cognac is a global product intended for international markets. It is adapted to export by nature. It has inscribed in the DNA of the region the idea that it is necessary to be open to the outside world and to adapt to the market.

Belonging to groups and insertion in distribution networks

The fact that the Cognac houses belong to the world’s major luxury goods and spirits groups, leaders in their market segments, gives them a particular strength: Hennessy belongs to the French group.

Hennessy belongs to the French group LVMH, Martell to the French group Pernod Ricard, Rémy Martin to the Rémy Cointreau group, Otard-Château de Cognac to the Caribbean group Bacardi, etc. Thanks to the financial means at their disposal, they have invested considerably in distribution networks to strengthen their brands in international markets. Today, this work is complemented by investments made by the major trading houses in production in order to secure supplies of eau-de-vie.

The anchoring of the Cognac houses in the African American market

The strong presence on the American market is the result of a long-term strategy of the Cognac houses. The American market is an ethnic market.

Cognac has established itself in the African American community as an identity product, compared to the whiskies and brandies of the “white” community. By extension, Cognac is now presented in the United States as a product of minorities. There is a feeling of belonging around cognac. This positioning is the result of commercial and marketing strategies which have been meticulously worked on for several decades. This success is the result of a presence and support on the ground for the African American community (presence in jazz clubs from the 1930s, support for civil rights associations after the Second World War, financing of cultural, sporting and educational activities, etc.). The Cognac houses now benefit from the association with the big names in rap music, which use the Charente eau-de-vie as a distinctive sign of success.

Territorial governance: the organization of the Cognac sector and the strength of the networks

The Cognac sector is highly structured in the region. The relations between the winegrowing and the trade are the cornerstone of territorial governance in the Cognac area. They are structured within the Bureau national interprofessionnel du Cognac (BNIC), which is in charge of strategic decisions for the sector. The sector has set up a management and planning tool (the Cognac Business Plan) in order to secure supplies for the Cognac houses on the one hand, and to guarantee outlets in line with the volumes produced for the vineyards on the other. This tool offers, beyond its strategic role, a space for objective dialogue for the two major families of the sector. This dynamic translates a collective capacity of the actors to put the success of the sector above the sum of the individual successes. Despite real competition between the players on the international markets, there is a real desire for cooperation in the area. The Cognac region is criss-crossed by a multitude of sectoral and territorial networks which give local players a collective strength. The area is an asset for the companies that are based there. The inter-knowledge of the players and the strength of the networks also finds an operational translation in the capacity of the players to innovate. The words partnerships, consensus, etc., find a real operational translation on the territory.

A training offer atypical of the size of the region

The Cognac area has an initial and continuing education offer that meets the needs of the local sector, including the upstream part for viticulture and related activities linked to packaging. The post-baccalaureate higher education courses that exist in the region are specific and demonstrate the attractiveness of the region for training players. Two organizations occupy a key place: the University of Spirits (attached to the University of Poitiers) which provides a Master’s level training in law and business; the International Center for Spirits (CIDS), an association of professionals that offers continuing education to professionals in the spirits sector.

Points of attention and challenges for the sustainability of the sector

The good health of the Cognac sector should not, however, mask the risks inherent in any development. The fact that the Cognac houses belong to the large global luxury goods and spirits groups, for example, raises the question of the long-term strategy of the sector. In terms of innovation, a “progressive” vision, encouraging diversification and innovation of products and processes, is opposed to a “traditionalist” vision, supporting a strong attachment to historical production processes. Finally, there are many issues at stake in the region: the problem of recruitment in an employment area with a low unemployment rate; climate change, which modifies the characteristics of the vine and the grape, and the environmental issue with the necessary ecological transition required at all stages of the value chain; the problem of infrastructure with, for example, the question of rail freight; the continuum of training in the region to provide a complete offer; the question of land for the expansion of the vineyard and all activities involved in the production process; 

A French cultural asset

The unique identity of Cognac is based on a real shared culture. The transmission of this heritage and the taking into account of it is a major challenge. To define an inventory of practices and the need to safeguard them, actors, professionals of the sector, wine-producing areas and civil society have been mobilized. Thus, ten skills and the involvement of complementary crafts have been identified in the service of this collective work: vine nursery, vine management, Charentais vinification, Charentais distillation, Charentais still, tasting practice(s), Charentais cooperage, wood ageing, assembly(s), product packaging. They constitute today a recognized inventory. The association Les savoir-faire du cognac, which is carrying out this project, will federate, share, raise awareness, transmit and develop the implementation of safeguard measures. In 2020, the Ministry of Culture registered the know-how of Cognac as an intangible cultural asset.

© Revue des deux Mondes

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