Cognac Thirst Lifting Vineyard Cost in France’s Charente Region

(Bloomberg) - Foreign demand for French cognac is pushing distillers to buy vineyards in a bid to secure grape supplies, raising prices for wine real estate in the Poitou-Charentes region, the Agriculture Ministry said.

Vineyard prices in Charente’s Grande Champagne area, one of six zones around the town of Cognac producing white wine for distilling, rose 13 percent last year to an average 45,000 euros ($60,925) a hectare (2.47 acres), the Paris-based ministry said in a report. Prices in the Bons Bois zone jumped 39 percent to 25,000 euros a hectare.

France’s exports of spirits climbed 14 percent to 3.68 billion euros last year, led by demand for cognac, with liquor accounting for 6.3 percent of the country’s food and farm shipments in 2012, trade data show. Cognac is a protected denomination of origin and must be made from grapes from the area around the town that gave the brandy its name.

“With a market that continues to grow, the cognac houses want to secure their eaux-de-vie supply, which is pulling the price of land and vines up,” the ministry wrote. “Due to scarcity of supply, quality of the vineyard is no longer a decisive argument for buyers in the negotiations.”

In Grande Champagne, the most sought-after zone with prices as high as 58,000 euros a hectare last year, vines younger than 20 years are most in demand, the ministry wrote. Older vines are finding buyers due to concern about losing market share, with vineyards ready to be uprooted and replanted still fetching 25,000 euros a hectare, it wrote.

Cognac brands owned by French producers include Remy Cointreau SA (RCO)’s Remy Martin, which has origins dating to 1724