The global cognac industry is undergoing one of its most significant transformations in decades as declining sales, geopolitical tensions, and changing consumer preferences force producers to rethink their long-standing business models.
Once driven by rapid premiumization and booming demand from key export markets, many of the world's leading cognac houses are now restructuring operations, expanding their product portfolios, and exploring new markets to restore growth.
According to the Bureau National Interprofessionnel du Cognac (BNIC), worldwide cognac shipments declined by 15.1% in 2025, falling to 141 million bottles, while export value dropped by an even steeper 25.3%, reaching EUR 2.24 billion. The figures highlight growing pressure on one of France's most prestigious spirits categories.
Premium Segments Feel the Pressure
The slowdown has affected every major quality category. Shipments of VS (Very Special) cognacs declined by 16.2%, VSOP (Very Superior Old Pale) fell 11.5%, while the premium XO and older expressions experienced the sharpest contraction, dropping 23.2%.
The decline demonstrates that even luxury spirits are no longer immune to changing economic conditions. Consumers across many markets are becoming more cautious with discretionary spending, leading many to reconsider purchases of high-priced premium products.
Tariffs and Trade Disputes Add New Challenges
Much of the industry's difficulties stem from its two largest export destinations: the United States and China.
In China, antidumping duties averaging 32.2% on cognac imports have been in force since July 2025. The measures were introduced amid broader trade tensions between China and the European Union following disputes over electric vehicle tariffs.
Meanwhile, the United States has become a more challenging market due to 15% tariffs on European products, combined with an unfavorable euro-to-dollar exchange rate. Together, these factors have significantly increased retail prices, making French cognac less competitive for American consumers.
The impact is reflected in export data. North America—including the United States, Canada, and Mexico—recorded a 19.4% decline in shipment volume and a 34% decrease in export value. European markets also weakened, with shipments falling 10.9% by volume and 22% by value.
Consumers Are Becoming More Selective
Industry leaders believe tariffs tell only part of the story.
Higher living costs, inflation, and evolving drinking habits are reshaping purchasing decisions worldwide. Consumers are increasingly seeking better value for money while embracing moderation, particularly among younger generations.
Executives across the industry argue that years of rapid price increases, supported by strong demand and limited supply, widened the gap between perceived value and retail prices. As economic uncertainty persists, many buyers are questioning whether premium spirits justify their higher cost.
Restructuring for a New Market Reality
The downturn has prompted significant internal restructuring throughout the industry.
Several producers have reduced operating costs through workforce adjustments, debt reduction, streamlined product portfolios, and improvements in production efficiency.
Rather than focusing exclusively on luxury positioning, many brands are now emphasizing flexibility and accessibility. Temporary promotions, limited-time discounts, and value-driven marketing campaigns have become increasingly common as companies seek immediate sales growth.
This marks a notable departure from the premiumization strategy that dominated the spirits industry for much of the past decade.
Innovation Beyond Traditional Cognac
Producers are also introducing new products designed to attract younger consumers and broaden drinking occasions.
Some brands are launching spirits outside the Cognac appellation, offering lower-priced alternatives that appeal to cocktail culture and more casual consumption. Others continue experimenting with barrel finishes, smaller bottle formats, and products specifically designed for mixed drinks.
Several houses are refreshing their packaging with more contemporary designs while maintaining their heritage, aiming to make cognac appear more approachable without compromising its premium identity.
The rise of cocktail-focused marketing campaigns reflects another important shift. Brands increasingly promote cognac in classic mixed drinks and partner with music, gastronomy, and cultural events to engage younger audiences that may have previously viewed the category as traditional or exclusive.
New Markets Offer Fresh Opportunities
Although traditional export markets remain under pressure, producers are increasingly optimistic about emerging economies.
Countries such as South Africa, Nigeria, Kenya, Thailand, Singapore, Taiwan, and Indonesia have demonstrated encouraging growth in recent years, offering new opportunities for premium spirits.
India has also emerged as a strategic long-term target following recent trade developments between the European Union and India. However, industry leaders acknowledge that substantial investment in consumer education will be required before demand reaches meaningful levels.
Looking Beyond the Current Downturn
Industry experts caution that today's production cuts may create future supply challenges. Since cognac requires years of ageing before release, reducing production today could limit the availability of younger spirits if global demand recovers more quickly than expected.
Many producers believe the industry's future depends not only on expanding into new markets but also on improving consumer understanding of cognac itself. Educating drinkers about production methods, heritage, craftsmanship, and quality may prove just as important as pricing strategies.
While the global cognac market faces one of its most challenging periods in recent history, the industry's response demonstrates a willingness to evolve. Through innovation, operational restructuring, market diversification, and renewed consumer engagement, cognac producers are positioning themselves for a more resilient future in an increasingly competitive premium spirits landscape.
Source: Vinetur