Speculation, exports and deregulation… Why champagne and cognac are in crisis

Christine Sevillano, president of the Independent Winegrowers of Champagne, says these words with a certain dread: "The cognac model is hanging over our heads. And it could happen quickly." This would signal the disappearance of winegrowers' wines, with the consequent disappearance of her union. In the Charente vineyards, there are only winegrowers left who sell their grapes by the kilo to the big houses. The latter control 99% of the cognac trade and can therefore dictate their prices.

In Champagne, according to figures provided by the industry, the trade already sells three-quarters of the bottles – nearly 90% of sales abroad – but owns less than 10% of the vineyards. "With the price speculation on grapes, it is simpler and more profitable to sell your harvest to the houses. As a result, in ten years, we have gone from 1,900 to 1,400 winegrowers manipulants (who produce their champagne from A to Z – Editor's note)" laments Christine Sevillano.

When you can sell your freshly picked grapes for up to 8 euros per kilo, why bother investing in modern cellars, vinifying and aging your wine for at least two years in the cellar before selling it? It's difficult for the 400 members of the independent Champagne winegrowers' union to influence prices when they together produce only 20 million bottles a year, while LVMH alone produces 90 million of the 271 million shipped in 2024.

"Yes, champagnes are too expensive, because scarcity is organized," denounces Christine Sevillano. The big houses and cooperatives (like Nicolas Feuillatte), which have well over a billion bottles in stock, want to reduce production, regulated at the industry level.

They are even considering limiting the yields of the next harvest to 8,000 kg of grapes harvested per hectare. A disaster for a winegrower like Christine Sevillano, whose production begins to be profitable at 9,500 kg per hectare. The independent producers are not campaigning for deregulation, but for their voices to be heard.

Because in Cognac, the only regulation is the demand from the big houses. "Without any control, winegrowers have been encouraged to increase volumes, to plant ever more. Except that today, they're being asked to uproot the vines ," describes Matthieu Devers of the CGT Hennessy union, the largest Cognac house.

Winegrowers are treated as disposable subcontractors by all-powerful contractors. "They are organized into a union, but at its head, there is probably a certain collusion with the big houses ," the union member suggests. " As a result, today the cognac vines are worthless."

In Champagne, on the other hand, a hectare of vines sells for around €1.1 million, and up to €1.8 million for grands crus. This speculation is preventing any new winegrowers from setting up shop and even posing serious problems for their succession.

The industry negotiates annual tax breaks in finance bills, otherwise inheriting a handful of hectares of vineyards to cultivate—considered assets—can quickly generate hundreds of thousands of euros in inheritance tax. The heirs then sell the land to pay off their debts, and only the largest estates have the means to buy them back.

Working conditions, however, are being dragged down. The CGT union denounces an intensification and rationalization that go hand in hand with the financialization of the sector. Whereas an employee looked after 1.75 hectares of vines a few years ago, today they are responsible for up to 5 hectares, the union confederation indicates. "Their latest discovery is to have simplified, in the specifications, the pruning of the vines to allow, after a few hours of training , seconded workers to carry them out, brought in by service providers with borderline mafia-like practices," denounces Philippe Cothenet, deputy general secretary of the CGT champagne union, who points out that "the shameful harvest caused 5 deaths in 2023."

Finally, the export-oriented commercial strategy also raises questions. In Champagne, the majority of bottles go abroad, but the French market remains solid (44%) and is declining less quickly. Cognac, on the other hand, is at the mercy of geopolitical uncertainties, with China and the United States as its main markets. "The Chinese no longer buy cognac, and even less so very expensive cognac. So it's not just a problem of customs barriers," says Matthieu Devers, who campaigns against the relocation of the production chain to China . "And what image would that give Americans of cognac made in China?" he asks. Instead, he suggests that the big houses, and Hennessy in particular, look at the European market - less than 15% of turnover, France included - which is much more stable and without customs barriers.