Finance
French cognac producers to pay to rip out vines as demand sinks
Published by Global Banking and Finance Review
Posted on January 27, 2026
2 min readLast updated: January 27, 2026
Quick Summary
French cognac producers are paying to remove vines due to a demand drop caused by trade tensions. New markets like India may offer future opportunities.
French Cognac Producers to Compensate for Vine Removal Amid Demand Drop
Impact of Trade Tensions on Cognac Production
PARIS, Jan 27 (Reuters) - French cognac producers plan to pay to tear their vines out by the roots to cut output in order to address a drop in demand for the high-end liquor due to tariffs.
Financial Compensation for Vine Removal
Cognac was one of the main casualties of the recent trade tensions between the European Union, the United States and China, which have threatened to jack up tariffs on it.
Future Market Opportunities
An anti-dumping probe has also hit brandy sales in China.
France's main association of cognac wine growers will pay its members 6,000 euros ($7,145) per hectare of vineyard destroyed, on top of 4,000 euros already offered by the French agriculture ministry, the UGVC's head said on Tuesday.
"We need to re-align the volume of production with demand," UGVC head Anthony Brun told Reuters.
The UGVC estimates the total volume of cognac sold has fallen by more than a third in the past three years, to about 140 million bottles in 2025.
Brun said it will borrow money over a 10-year period to finance the handouts. He declined to estimate how many hectares will be destroyed.
Recent trade deals between the EU and Mercosur, as well as the EU and India, may open new markets for cognac, but it will take years to build lasting demand, Brun said, adding India seems to offer significant potential for the industry.
($1 = 0.8397 euros)
(Reporting by Inti Landauro; Editing by Alexander Smith)
Key Takeaways
- •French cognac producers plan to reduce output due to falling demand.
- •Trade tensions have led to increased tariffs on cognac.
- •Producers will receive financial compensation for vine removal.
- •Cognac sales have dropped by more than a third in three years.
- •New markets like India offer potential growth opportunities.
Frequently Asked Questions about French cognac producers to pay to rip out vines as demand sinks
1What is compensation in the context of agriculture?
Compensation in agriculture refers to financial payments made to farmers or producers for losses incurred, such as the removal of crops or vines due to market conditions.
2What are market opportunities?
Market opportunities refer to favorable conditions or situations that allow businesses to grow, expand, or introduce new products or services in a specific market.
3What is cognac?
Cognac is a type of brandy produced in the Cognac region of France, made from specific grape varieties and aged in oak barrels, known for its rich flavor and quality.
