The Bureau National Interprofessionnel du Cognac (BNIC) declared that annual revenues fell by 13.4% to €2.7bn in the year ending 3 July 2025, while volumes declined 4.2% to 154.6 million bottles. According to a report by Indexbox, “this downturn was driven by a sharp 24.4% drop in exports to China, largely due to an anti-dumping investigation, and a 4.6% decline in North American revenues despite a slight volume increase. European revenues also decreased by 11%.”

These are sobering numbers for a category which was flourishing pre-pandemic. For further context, Hennessy, the largest player in the category, recorded four consecutive years of volume decline since its peak in 2021, equalling more than two million 9-litre cases.

“In the US, tequila has overtaken cognac as the trendy spirit,” says Julien Pepin Lehalleur, global brand education & training director at Hennessy. “One of the explanations was that from the end of 2019 until 2024, we stopped investing in the on-trade. And from 2018-2023, we were on allocation, and we didn’t have enough eau-de-vie to supply the demand.

“So, what retailers did in the US was increase the prices, which meant selling less at a higher price. This, plus the pandemic, which caused issues with logistics, meant cognac was made scarce, and prices went through the roof.”

It’s important to recognise that 98% of cognac is exported and that the US and China are the biggest international markets for the category. Pepin Lehalleur was keen to reinforce that the brand did not inflate its prices to compensate for various headwinds, including the US-EU tariff war. “We didn’t increase our prices because of tariffs; we swallowed the difference. The plan is now to focus on the on-trade, reinvest, increase our footprint and distribution, and it’s a long-term plan. We need to get bartenders to understand how to utilise cognac and change the perception of cognac in the US as mainly a man’s drink, in nightclubs and just for sipping.”

In China, there was a separate series of challenges. Pepin Lehalleur adds: “At the same time in China, there was an economic crisis and a real estate crisis which exploded right after Covid. This, plus a retaliatory tax and people not banqueting with XO, meant sales went down. So, when the majority of your business is going down (US and China exports), it’s tough to compensate with booming markets like South Africa and travel retail.

“People are very cautious with their money and are spending less. In China, we used to sell a lot of XO and Hennessy Paradis, and this is shifting to more VSOP and younger styles. Meanwhile, high-end cognacs in Asia are struggling because people are very cautious. In the US, 90% of the business is VS, so the style is not changing there.

“Nevertheless, we see that the shift is faster on VSOP and XO than on VS, meaning our core target African American is lowering conception because they are suffering with the current climate in the  US, but we also see the Latino and Asian community is shifting and VSOP is what Latinos drink and XO  is what the Asian community celebrates with so we see a growth on the XO and Paradis. From 2024 to today, China is bouncing back a little, but the US is still very slow.

“That’s why we’re shifting our advertising and promotions back to the on-trade, and it’s a central decision made by the maison. We have to encourage markets to invest in their on-trade because, while it’s not where you make the majority of your business, it’s where you build brand equity.

“The focus is winning back the US, growing back in China and Hennessy My Way, our global on-trade programme, is part of that strategy.”

Innovation

One of the great strengths of cognac is its rigorous set of standards. These regulations, controlled by the BNIC are designed to maintain the quality standard of cognac and strengthen the category’s brand overseas. Governing bodies in other wines or spirits often receive criticism for being too rigid or too flimsy, but there seems to be a mutual appreciation from both the major players and craft producers alike.

Germain Canto, BNIC educator, says: “If we change the possibility of the law with cognac, it’s like we open Pandora’s box and everyone will want to try something new and mainly now, because business is difficult and people are looking for new opportunities.”

Bourgoin Cognac in Saint-Saturnin is finding ways to innovate even with the tight regulations. Founder Frédéric Bourgoin comes from a family of winegrowers and he launched the brand in 2015, making unblended cognac from their own 25ha of 100% organic Ugni Blanc.

Rebecca Bourgoin, wife of Frédéric, joined the company at the beginning of the pandemic following a career working with major cognac houses, including Courvoisier.

“People think that the appellation looks frigid, but actually there’s room to innovate within the regulations. We laugh because the BNIC must dread the phone calls from Frédéric, but if you look at some of our products, they’re brand new concepts, but comply completely.”

The most eye-catching of its releases is Marée Haute, a 10-year-old cognac which is down-proofed with up to 1% micro-filtered seawater which is said to open up the flavour of the spirit. Frédéric Bourgoin adds: “There was no point in producing what others are doing like a consistent product for export. Big houses hide the nuances of terroir in order to produce the same flavour which their consumers expect. “People think that the appellation looks frigid, but actually there’s room to innovate within the regulations. We laugh because the BNIC must dread the phone calls from Frédéric, but if you look at some of our products they’re brand new concepts but comply completely.” The most eye-catching of its releases is Marée Haute, a 10-year-old cognac which is down-proofed with up to 1% micro-filtered seawater which is said to

“We take a winemaking approach so, while export markets aren’t ready for vintages, locals are fascinated by the nuances of them. Restaurants are a big part of our clientele, and we now work with more than 200 Michelin-starred venues.”

Up to the pandemic the major four cognac houses enjoyed lucrative success overseas but, given the turbulent market of 2026, the Bourgoin family insist they’re more comfortable with a small production and full control of the process.

Rebecca Bourgoin adds: “If you’re making your own cognac, it’s easy to date them and make vintages. If you’re buying grapes or wine it’s hard to do this. Some of the big brands have 12 years of stock which isn’t sold, which means that they’ve had to reduce purchasing contracts, which doesn’t affect us.

“For a small house like us, the 2% (of cognac’s domestic sales) is a lot. We’re not planning to buy yachts and live extravagant lives, we’re just happy to have farm-to-bottle control.”