Cognac is a type of brandy that was fist created in the 16th century when Dutch settlers traveled to France to purchase salt, wood, and wine. The merchants faced problems when preserving the wine, on their return journey and decided to distill it into eau-de-vie, which is known as a colorless fruit brandy, to maximize its quality.

Today, Cognac is produced by twice-distilling white wine produced in any of the designated growing regions. The white wine used in making cognac is very dry, acidic, and thin; though it has been characterized as "virtually undrinkable", it is excellent for distillation and may be made only from a strict list of grape varieties.

After the grapes are pressed, the juice is left to ferment for 2–3 weeks, with the wild yeasts converting the sugar into alcohol; neither sugar nor sulfur may be added. At this point, the resulting wine is roughly 7 to 8% alcohol.

Once distillation is complete, it must be aged in Limousin (a forest in France where 2 types of oak, Quercus robud and Patraea are harvested for making wine barrels) oak casks for at least two years before it can be sold to the public. When a minimum of ten years pass in the oak barrel, the cognac's alcohol content decreases to 40% in volume. The cognac is then transferred to large glass bottles and stored for future blending.

The age of the cognac is calculated as that of the youngest component used in the blend. The blend is usually of different ages and (in the case of the larger and more commercial producers) from different local areas.

Each cognac house has an assigned master taster, who is responsible for blending the spirits, so that cognac produced by a company will have a consistent house quality. It is like the process of blending whisky or non-vintage Champagne to achieve a consistent flavor.

There are 6 distinct grades of cognac:

V.S. (Very Special) or (three stars) designates the youngest blend in which the brandy has been aged for at least two years in a cask.

V.S.O.P. (Very Superior Old Pale) or Reserve is a blend in which the youngest brandy is aged for at least four years in a cask.

Napoléon in which the brandy is aged for at least six years.
XO (Extra Old) The minimum age of the brandy used in an XO blend must be at least 10 years.
XXO (Extra Extra Old) is a specific indication given to wine spirits that have been aged for at least 14 years.

Hors d'âge (Beyond Age) is a designation which BNIC states is equal to XO, but in practice the term is used by producers to market a high-quality product beyond the official age scale.

Most names of the grades are in English because the historical cognac trade, particularly in the 18th century, significantly involved the British, likely because of their consumption.

As suggested with Scotch, Cognac aficionados usually drink their Cognac “neat” (straight and without ice) but roughly 60% of Cognac consumption in the world is diluted by being served on the rocks, with water or mixed in cocktails.