Russian cash in cognac causes local indigestion

29th April 2007, Comments 0 comments

COGNAC, France, April 29, 2007 (AFP) - The sight of Russian investors perusing vineyards in the famous Cognac region of southwest France has locals suspicious of their motives and wary of their financial backers.

COGNAC, France, April 29, 2007 (AFP) - The sight of Russian investors perusing vineyards in the famous Cognac region of southwest France has locals suspicious of their motives and wary of their financial backers.

The chairman of the Cognac business association BNIC, Alain Philippe, has two hypotheses.

"Either the Russians are coming here to look for good business opportunities, which I have nothing against, or they want to justify the sales of false cognac on the pretext of having bought a few hectares of vineyards," he said.

Cognac is a brandy made in accordance with strict production rules, distilled over many years, and produced from the vineyards surrounding the French town of Cognac.

The problem in Russia, where the market for brandy is growing fast, is that any brandy can be labelled cognac, damaging the reputation of the original French version and compromising its exclusivity.

According to Philippe, about ten cognac producers have "made a pact with the devil" by working with the Russians, who he suspects of wanting to use the name to legitimise their fake "cognac" brandy in Russia.

His worries do not stop there.

"I am not casting aspersions, but I fear the worst, because behind this market (in Russia) there is the mafia," he said, adding that the entry of Russia in the World Trade Organisation would be an opportunity to protect the cognac brand name.

Russia is the largest economy in the world that is not yet a member of the WTO, which obliges members to respect intellectual property rights, but negotiators hope the country can finally complete the process this year.

The manager of cognac producer Jenssen in the village of Bonneuil, Epsen Schulerud Soland, stressed that the possible arrival of the mafia in the cognac-producing region was "a real threat, but that one must make a point of not confusing it with others."

In July last year, the Moscow-based wine and spirits company MVZ bought a stake in Jenssen, a Norwegian-owned group, and is to complete a takeover of the company and its 24 hectares of vines by the end of 2007.

"I understand the fears that the (cognac) appellation will be usurped, but the investors who are spending a lot of money here have no interest in compromising everything by selling fake cognac in Russia," he said.

Two months ago, fellow cognac producer Croizet-Eymard was also snapped up by the Russian Wine Trust, which already owns another vineyard.

Schulerud, who said a Russian vodka producer had also announced plans to invest in the Cognac region, underlined the difference between venerable Russian drinks companies and other less scrupulous investors.

"I can assure you that what is sold as cognac by MVZ in Moscow is real cognac, bottled in Bonneuil," he said, before adding that perhaps some investors "with a less exposed profile" might be benefiting from the market for contraband cognac in Russia.

Russians have long been big drinkers of cognac and French producer Camus claims it supplied the court of the Russian Tsar in the 19th century.

In seven years, sales of cognac to Russia have increased seven-fold, tracking the economic development of the group, with exports reaching 4.8 million bottles in 2006.

Russia is now the sixth biggest market in the world for cognac.

The BNIC association, which groups 6,000 growers and 300 dealers in the Charente region of France in which the town of Cognac is found, plans to launch an advertising campaign in Russia to educate consumers about the cognac appellation.


Copyright AFP

Subject: French news

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