Market and export
Cognac purchase contracts upheld by Angoulême court
It is now facing judicial decisions that reaffirm the validity of long-term purchase Contracts for Cognac, even in adverse economic contexts.
In an increasingly volatile global market, certainty in commercial Contracts is essential for the stability of production supply chains. The Cognac sector has experienced phases of expansion and sharp slowdowns. It is now facing judicial decisions that reaffirm the validity of long-term purchase Contracts for Cognac, even in adverse economic contexts. This situation highlights the tension between the need to adapt to market changes and the importance of honoring commitments. The implications of this tension extend beyond the Charente region.
The Firm Judicial Stance on Purchase Contracts for Cognac
A recent ruling by the commercial court of Angoulême has reignited the debate over the sanctity of contractual commitments in the Cognac sector. On September 22, the court annulled the contract terminations. These had been carried out at the end of January by the trader Sazerac de Segonzac. Sazerac de Segonzac is the Charente subsidiary of the American group Sazerac. The decision sided with a collective of 45 vine growers from the Charente. It also sided with Distillerie Saint-Martin. It ordered Sazerac to honor the multi-year Contracts. This means the company must purchase 5,000 hectoliters of pure alcohol in 2026, as originally provided for in the agreements.
The court ordered provisional enforcement of the obligations relating to the 2026 and 2027 harvests. This measure was deemed necessary to allow vine growers to proceed with planning and allocating their plots before September 30, 2026. It enables volumes, delivery, distillation and storage of products to be organised without delay. The court acknowledged that crop preparation requires rapid organisation. However, it rejected provisional enforcement for harvests beyond 2027, due to the difficulty of reversing operations so complex over multiple seasons. The vine growers were also awarded reimbursement of €27,000 for legal costs, that is €600 for each claimant.
This emphasis on contractual stability is not new in the sector. A significant precedent occurred four years earlier. The house Hennessy is the largest trader in the Charente. It found itself in the opposite position, that of the injured party. In July 2022, Hennessy sued a distillery. The distillery had broken a three-year purchase Contract, signed in December 2017. The Contract covered the vintages 2017, 2018 and 2019. The distillery was ordered to pay €252,150, equal to 50% of the value of the approved eaux-de-vie. The judge found that the distillery had voluntarily sold its 2019 products to a competing company with speculative intent.
Contractual security has a certain price and, within a multi-year framework Contract in a period of high prices, the purchase guarantee leads to a price slightly lower than the spot market, but it ensures the sale of the spirits even in case of a downturn.
The judgment, confirmed on appeal in July 2025, emphasised that the failure to deliver prevented Hennessy from carrying out its trading activity. It deprived Hennessy of the opportunity to enhance the eaux-de-vie under its own brand. These cases, even with reversed roles, reiterate the principle that a signed Contract binds both parties, regardless of market fluctuations.
Market Dynamics and Lessons from Precedents
The economic context played a central role in Sazerac’s decision to terminate the Contracts. The company justified its action by citing a severely degraded Cognac market, characterised by persistent commercial and economic difficulties. Among the causes cited were climate change, widespread overstocking and a decline in global consumption, aggravated by the international context. Sazerac stated that it had in storage the equivalent of 60 years of sales, a figure that highlights considerable pressure on its inventories.
The current situation contrasts sharply with the period when the Contract between Hennessy and the distillery was signed. That agreement was concluded in December 2017. It took place during a commercial boom for Cognac. Growths of 10% in volume and 14% in value were recorded. The distillery interrupted the supply of the 2019 vintage, which provided 410 hectoliters of Cognac cru Fins Bois for a value of €561,700. It intended to renegotiate the price it considered insufficient or seek equivalent valorisation offered by others. This shows how market conditions can encourage breaking agreements, both in growth phases and contractions.
For the vine growers involved in the Sazerac case, multi-year Contracts represent a true financial lifeline. Jehan Kappes-Grangé is a vine grower and a member of the UGVC. He emphasised how Contracts are crucial for his operation. He had made significant investments in previous years and still has commitments to meet. The collective’s demand was for the Contracts to be applied. The five-year agreements were supposed to run until the 2029 vintage and the three-year ones until 2027. Many of these Contracts had been tacitly renewed. Despite the legal action, about 40 of the 87 vine growers with multi-year Contracts with Sazerac had already reached settlement agreements, suggesting a differentiated approach among producers.
The Value of One’s Word and the Impact on the Supply Chain
The Angoulême court’s decision sends a clear message to the entire supply chain. It states that a signed Contract binds both parties and its value cannot vanish with changes in economic conditions. The Union Générale des Viticulteurs pour l’AOC Cognac (UGVC) and the Confédération Nationale des Producteurs de Vins et Eaux-de-vie de Vin AOC (CNAOC) welcomed the judgment as a victory for vine growers and their families, who regain the visibility necessary for their projects and investments. This collective action is seen as a strong symbol. It encourages other vine growers to assert their rights in court. This helps overcome a certain resignation often found in the sector.
The Hennessy precedent illustrates another facet of the “given word”. A distillery was accused of having sold eaux-de-vie to a competitor for speculative purposes. The distillery argued that the price offered by Hennessy was not objective or sufficient. Despite its arguments, including those about the alleged excessiveness of the penalty, the court upheld the conviction. The court reaffirmed the importance of honoring commitments even when opportunities for greater profit elsewhere are perceived. The interprofessional Cognac price observatory indicated a weighted average price for Fins Bois eaux-de-vie of €1,270 for 2019. Hennessy had offered the distillery a price of €1,402.30, higher than that average.
Today the Cognac market is characterised by high stocks at all traders. The market shows a reduction in volumes and prices in new multi-year Contracts, which sometimes exceed spot market rates. The distillery involved in the Hennessy case no longer had Contracts with the house. It understood traders’ need to reduce volumes because “they cannot buy more than they sell”. The scope of the recent Angoulême decision goes beyond Cognac, as emphasised by the president of CNAOC, Jérôme Bauer. He considers it an essential reminder so that producers can invest with confidence in the commitments of their buyers across all vineyards. The challenge now is to ensure the effective application of these decisions, pending the outcome of the appeal procedure.
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