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French cognac Producers to Pay Vineyards to reduce Output Amidst Declining Demand
Cognac producers in France are implementing a plan to pay vineyard owners to uproot their vines, aiming to curtail production in response to falling demand and the impact of international trade disputes. This move comes as the industry grapples wiht challenges stemming from tariffs and shifting market dynamics.
Impact of Trade Tensions and Market Shifts
The Cognac industry has been significantly affected by recent trade tensions between the European Union, the United States, and China, which have led to the threat of increased tariffs. Additionally, an antidumping investigation has negatively impacted sales in china, a key market for the spirit.
Financial Incentives for Vineyard Removal
The Bureau National Interprofessionnel du Cognac (BNIC), the main French association of Cognac growers, will offer its members €6,000 (approximately $6,600 USD as of January 28, 2026) per hectare of vineyard removed, along with a pre-existing €4,000 per hectare offered by the French Ministry of Agriculture. This was announced on November 28, 2023, by BNIC Director Anthony Brun. Reuters reported on the details of the program.
“We have to rebalance the volume of production with demand,” Brun stated. the BNIC estimates that Cognac sales have decreased by more than one-third over the past three years, with projected sales reaching approximately 140 million bottles in 2025.