Market evolution: Brandy (CN 220820) — 2015–2025

Introduction

This report examines the evolution of EU trade in spirits obtained by distilling grape wine or grape marc (customs code 220820) over the 2015–2025 period. CN 220820 covers a broad family of products — including Cognac, Armagnac, Brandy de Jerez, Weinbrand, grappa, and other grape-based spirits — in both small (≤2 l) and bulk (>2 l) packaging formats. The EU is overwhelmingly a net exporter in this category: in 2025, exports reached €2.41 billion against imports of just €88.4 million, yielding a trade surplus of €2.32 billion. Scope & Definitions

The period under review is one of structural adjustment. EU export volumes have declined markedly, yet unit values have risen, signalling a market that is becoming more value-driven rather than volume-driven. At the same time, import volumes have grown from a very low base, and the geographic map of both exports and imports has been redrawn. France, by virtue of the Cognac and Armagnac appellations, remains the dominant force, accounting for over 90% of EU export value in 2025. The following sections unpack these dynamics in detail.

1. Export Contraction, Import Growth, and the Rise of Unit Values

The most striking macro-level trend over the decade is the simultaneous decline in EU export volumes and the rise in export unit values. Between the first and last years of the data window, export quantity fell by 26.3% (from 183,195 t to 135,106 t), while export value dropped by a more moderate 13.9% (from €2.80 billion to €2.41 billion). The difference is explained by a 16.7% increase in the average export price per tonne, from €15,302/t to €17,855/t. Expressed per litre of pure alcohol, the price increase was even larger at 22.5%, rising from €31.91 to €39.09 per litre pure alcohol. General Overview

1.1 The export peak and subsequent decline

The data reveals that EU exports of CN 220820 reached their highest volume in 2021 at 136,637 t (supplementary quantity: 57.2 million litres pure alcohol) and their highest value in 2022 at €3.73 billion. The peak in pure alcohol terms came earlier, in 2019, at 113.1 million litres. The 2020 dip (quantity: 116,809 t; value: €2.59 billion) is consistent with the well-documented impact of the COVID-19 pandemic on on-trade consumption and global logistics, while the subsequent recovery in 2021–2022 was partly driven by restocking. The decline from 2023 onwards reflects both structural shifts in key destination markets and a possible normalization after pandemic-era overstocking.

Note: Supplementary unit values are provided only for first and last years in the narrative facts.

1.2 Imports: growing from a low base

EU imports of CN 220820 are an order of magnitude smaller than exports, but they have grown substantially. Import value rose 34.4% (from €65.8 million to €88.4 million) and quantity grew 48.1% (from 16,973 t to 25,129 t). In supplementary unit terms, imports of pure alcohol rose 25.6%, from 13.4 million to 16.8 million litres. Importantly, the average import price per tonne fell by 9.2%, from €3,877/t to €3,520/t, indicating that the EU is increasingly sourcing lower-priced bulk grape spirits from third countries. This contrasts sharply with the rising export unit values, underscoring the EU's role as an exporter of premium products and an importer of value-oriented ones. General Overview

1.3 The trade balance remains strongly positive but is narrowing

The EU trade surplus in CN 220820 declined from €2.74 billion in 2015 to €2.32 billion in 2025 (–15.1%). Net import reliance, which is deeply negative because the EU exports far more than it imports, moved from –220.7% to –391.2%, reflecting the faster growth of imports relative to exports. Nevertheless, the EU's export propensity — the share of domestic production that is exported — rose from 69.6% to 82.0% over the period, indicating that the sector has become even more export-oriented. Trade intensity (the sum of exports and imports as a share of production) similarly increased from 69.9% to 82.4%. Autonomy & Vulnerability

2. Geographic Rebalancing: Shifting Partners and Market Diversification

The geographic distribution of EU brandy trade has undergone significant change between 2015 and 2025, affecting both export destinations and import sources. The data reveals a notable shift away from the United States and Singapore towards China, and a diversification of import origins from traditional New World producers towards Eastern European and Caucasus suppliers.

2.1 Export markets: the US declines, China rises, Singapore erodes

The United States has long been the single largest export destination for EU brandy, but its share has diminished. Export value to the US fell 20.5%, from €951 million to €756 million. At the same time, exports to China surged 53.2%, from €322 million to €494 million, making China a firmly established second-largest market. Singapore, often a transit hub for re-export into broader Asian markets, saw a 35.9% decline from €490 million to €314 million. The Philippines experienced the steepest fall at –67.8% (from €44.9 million to €14.5 million). General Overview – Top Partners

The relative stability of the United Kingdom (–9.9%) is notable and may partly reflect the post-Brexit adjustment, with the UK treated as a non-EU partner from 2021 onward. The concentration of exports (HHI on value) remained broadly stable at around 1,680, indicating that while the market mix has shifted, overall diversification has not dramatically changed. General Overview – Concentration

2.2 Export volatility differs markedly by partner

Volatility measured by coefficient of variation (CV) in export value shows that the UK market is the most stable destination (CV: 0.045), followed by Canada (0.099) and the United Arab Emirates (0.184). At the other extreme, the Philippines (0.463), South Africa (0.521), and Hong Kong (0.509) display high volatility, making them less predictable revenue streams. China, despite its rapid growth, has been relatively stable (CV: 0.166), supporting its emergence as a structural market rather than a cyclical one. Volatility & Shocks

2.3 Import sources: Eastern Europe and the Caucasus gain ground

On the import side, the composition of suppliers to the EU has shifted considerably. Georgia, already the largest supplier in 2015 with €6.9 million, grew to €9.7 million (+40.4%). Moldova more than doubled from €2.6 million to €5.2 million (+100.5%). Türkiye showed the most dramatic growth, rising from €779,000 to €4.9 million (+527.2%). Meanwhile, traditional New World wine producers such as Australia (–50.0%) and Argentina (–49.2%) lost ground. South Africa grew modestly (+13.9%), from €3.8 million to €4.4 million. General Overview – Top Partners

Import concentration (HHI on value) decreased slightly from 1,105 to 1,043, and on volume from 1,096 to 954, confirming a mild diversification of suppliers. Import volatility is generally higher than for exports, with Ukraine (CV: 1.12), Serbia (CV: 1.19), and Australia (CV: 1.03) being the most volatile sources — consistent with these being smaller, less established suppliers. Volatility & Shocks

2.4 EU Member State roles: France dominates, the Netherlands contracts

Among EU Member States, France is the overwhelmingly dominant exporter, accounting for €2.19 billion of the €2.41 billion total in 2025 (90.7%). This reflects the outsized role of Cognac, the world's most valuable brandy appellation. France's exports declined by 10.5% in value over the period. Spain, the second-largest exporter, fell more sharply (–40.4%, from €126 million to €75 million). Latvia, interestingly, grew by 35.4% (from €33.5 million to €45.3 million), likely reflecting the role of its spirits industry in processing and re-exporting. The most dramatic decline was in the Netherlands (–81.3%, from €98.4 million to €18.4 million), suggesting a loss of its historical role as a trading and bottling hub for this product. General Overview – Top Reporters

On the import side, France is also the largest EU importer (€20.1 million in 2025), followed by the Netherlands (€20.9 million, up 84.4%), Spain (€10.4 million), and Portugal (€7.6 million, up a striking 3,648% from just €202,000 in 2015). Portugal's surge likely reflects its role in receiving bulk grape spirits for blending or re-export. General Overview – Top Reporters

3. Production Trends, Specialisation, and Market Shocks

Understanding the EU's production base is key to interpreting the trade dynamics. The data shows that EU production of CN 220820 has been relatively stable in volume terms but has nearly doubled in value, consistent with premiumization. At the same time, a handful of Member States display strong revealed comparative advantage, and a few isolated price shocks have affected specific bilateral trade flows.

3.1 Production: flat volumes, surging values

EU production of spirits under CN 220820, measured in litres of pure alcohol, declined modestly from 196.1 million litres in 2015 to 186.5 million litres in 2025 (–4.9%). The minimum was 160.8 million litres and the maximum 228.0 million litres, suggesting some cyclical variation. However, production value nearly doubled, rising from €1.93 billion to €3.75 billion (+94.0%). This divergence — flat volumes against sharply rising values — strongly suggests that the EU is producing and selling higher-value brandy (e.g., aged Cognacs and Armagnacs), or that prices at the producer level have increased significantly. Market Structure – Production

3.2 Specialisation is heavily concentrated in France

Revealed comparative advantage (RCA) analysis for 2025 confirms that France is by far the most specialised EU exporter of CN 220820, with an RCA of 7.35 and a revealed symmetric comparative advantage (RSCA) of 0.76. France accounts for 57.4% of EU production in this category but only 7.8% of total EU exports, reflecting the dominance of this single product category in France's export basket. Latvia (RCA: 4.85, RSCA: 0.66) and Estonia (RCA: 2.99, RSCA: 0.50) also display meaningful specialisation, consistent with their roles in Baltic spirits trade. Spain (RCA: 1.51) and Italy (RCA: 1.22) have moderate specialisation, reflecting their broader beverage export portfolios. At the other end, countries such as Cyprus, Poland, Hungary, Slovakia, and Sweden display very low or negative RSCA values, confirming that they are not competitive in this product category. Market Structure – Specialisation

3.3 Product segment dynamics: bulk grape wine spirits dominate imports, small-format dominates exports

The segment-level data (available from 2020 onward for most codes) reveals important structural differences between imports and exports. On the export side, code 22082012 ("Obtained by distilling grape wine" — a residual category that includes Cognac) accounted for 83,558 t and €2.11 billion in 2025, representing 61.8% of total export quantity and 87.6% of export value. Its average price of €25,290/t far exceeds other segments, confirming its premium positioning. Smaller segments include Brandy/Weinbrand in >2 l containers (22082066: 16,705 t, €53.8M) and Brandy/Weinbrand in ≤2 l containers (22082018: 22,948 t, €111.6M), as well as Grappa (22082026: 710 t, €10.2M). Product Segment Breakdown

On the import side, code 22082069 ("Spirits obtained by distilling grape wine, in containers >2 l, incl. Armagnac, excl. Cognac and Brandy/Weinbrand") dominates with 13,045 t and €22.7 million in 2025, accounting for 51.9% of import quantity and 25.6% of import value. Bulk Brandy/Weinbrand (>2 l, code 22082066) was the second-largest import segment at 4,562 t. Notably, a sharp increase was observed in code 22082019 ("Spirits obtained by distilling grape wine, ≤2 l, excl. Cognac, Armagnac and Brandy/Weinbrand"): its import quantity jumped from 327 t in 2024 to 2,639 t in 2025, and its value surged from €2.6 million to €19.2 million, suggesting a new or rapidly expanding niche in the import market.

3.4 Isolated price shocks but no systemic disruption

The shock detection analysis identifies three notable price shocks over the period:

• Türkiye imports (2020): A price shock with an abnormality score of 17.1 and a 56.7% price shift, affecting 10.0% of import value. This likely reflects the rapid scaling up of Turkish brandy exports to the EU, with price volatility as a new trade relationship was established.
• Philippines exports (2023): A price shock with abnormality 8.7 and a 90.4% price shift, affecting 1.6% of export value. The Philippines had already been declining as an export market; the price spike may reflect either a composition shift (fewer, higher-value shipments) or currency effects.
• Ukraine imports (2019): A price shock with abnormality 7.1 and a 94.4% price shift, affecting 3.7% of import value. Ukraine is a volatile supplier (CV: 1.12), and the shock may be linked to geopolitical disruption or quality/specification changes.

These shocks are relatively contained and do not indicate systemic risk to the EU brandy market. The export-side HHI on value has remained essentially flat (from 1,680 to 1,682), confirming that export concentration has not increased. Volatility & Shocks

Conclusion

The EU brandy market (CN 220820) over 2015–2025 has undergone a structural transformation characterized by three main features: (1) a significant contraction in export volumes, partially offset by rising unit values; (2) a geographic rebalancing away from the US and Singapore towards China, and from traditional New World import suppliers towards Eastern European and Caucasus origins; and (3) a production base that is increasingly value-oriented rather than volume-driven.

The EU remains the world's dominant producer and exporter of grape-based spirits, with a trade surplus exceeding €2.3 billion. France's Cognac and Armagnac appellations anchor this position, accounting for over 90% of export value. However, the decline in volumes — down 26.3% in tonnage terms and 29.7% in pure alcohol terms over the decade — warrants attention. While rising unit values suggest premiumization, the loss of volume in markets like the Philippines and the erosion of the Singapore transit trade point to competitive or structural headwinds.

The growing import profile, though small in absolute terms, is noteworthy: the EU is increasingly sourcing bulk grape spirits from Georgia, Moldova, and Türkiye, potentially for blending or for the lower end of the domestic market. The sharp jump in imports of non-Cognac, non-Armagnac small-format grape wine spirits (code 22082019) in 2025 merits monitoring as a potential emerging trend.

Overall, the EU brandy sector appears resilient but is navigating a transition towards higher value, lower volume, and a more geographically diversified trade profile. The key risks ahead lie in demand softening in the US (still the largest single market), the sustainability of China's rapid import growth, and the evolving competitive landscape as Eastern European and Caucasus producers scale up their exports to the EU.