Is Armagnac “Expensive”?

Let’s get to the number crunch.  For example, the  production cost of a litre of vodka is around $0.90.  A liter of 12 year old whisky of 12 years is around $1.70.  And a liter of 12 year old armagnac, bears a production cost of about  $9.00!  Now that’s a big difference.  But why is the cost of making a liter of armagnac so different from that of other spirits?  Let’s look at this in a bit more detail.

Resources
Probably the biggest factor for the relatively high cost of Armagnac is the cost of resources. Whisky and vodka are alcohols that are created from grain, and the cost is low.  Grain is produced in large quantities, whereas the grapes for Armagnac are in strictly limited supply.  Also, very often, big-time agricultural crops like wheat get a lot of subsidies from the EU.

This puts the ratio between Armagnac and whisky at 7:1 and when it comes to vodka, the ratio is even higher – at 14:1. In other words, the cost of the resources in producing a liter of Armagnac is 14 times more expensive than what it costs to produce a liter of vodka.  And if you’re wondering about gin, this lies in between Armagnac and vodka, depending on the method of distillation and herbs used.

Branding
The Armagnac region has protected the name, much like Champagne and Port. It’s just not possible to distill a few grapes and call it Armagnac. Just like a Scotch can’t bear the name unless it’s spent a few years in a barrel in Scotland, Armagnac has to be grown, distilled and aged in the Armagnac region.

Production & Distillation
The exact method of creating a unique Armagnac is a well-kept secret, but the basic method is single-distilled wine, matured in oak casks, and blended to suit the particular product. Naturally, the longer Armagnac ages, the more the final product is likely to cost.

Distilling other spirits is much less expensive than distilling Armagnac. 90% of other spirits are produced using distilling procedures where the cost is very low. But with Armagnac, it’s the opposite. Distilling wine from grape juice is a long and complicated process.

As the alcohol comes from grapes – not grain, harvests vary a lot.  In some years the results are pretty low and weak. The cost of harvesting grapes is much, much, much more expensive than any other resource used for making alcohol.

Aging
High-quality casks are vital to the aging process. Armagnac casks are sourced exclusively from certain forests in France, made by true craftsmen. These can only be used as Armagnac casks only if no other spirit has been inside the cask before. If you take a bourbon barrel and then want to age Armagnac in it; you cannot name it “Armagnac”. Other spirits are allowed to use casks where other products sat in like xéres, port. Casks are simply less expensive for other spirits.

Also, many other spirits are crafted in a chemical way and produce neutral alcohol so the taste is added by using specific “d’eau de coupage” – water that gives specific taste.

Exclusivity
The demand for Armagnac has been steadily rising, in Asia and US. The demand is such that as some old vintages are disappearing there are producers that are forced to block their stocks. If you recall that some blends contain batches that are more than a century old you’ll see how this contributes to the restricted supply. It’s not like they can go back in time and produce more …

How expensive it is?
In the unaged segment, Blanche armagnac is as expensive as premium vodka, gin, and tequila.
While in the aged segment, Armagnac is less expensive than Cognac and premium whiskies.

As you noticed, there is no relation between costs of resources and pricing. Pricing difference is not related to quality, it is related to marketing. Armagnac marketing is very humble, almost inexistent compared to other spirits.

So there you have it!  Armagnac is not expensive compared to other premium spirits. So next time you’re trying to justify the new addition to your bar, think about the wonderful tradition and craftsmanship you’re buying.  If you think hard about it, I t’s the closest we can get to time travel.