Over the centuries, various grapes have been used for cognac; the principal one these days is ugni blanc, an otherwise-pedestrian variety that just happens to make for great brandy. The grapes are grown in six different districts that ring the town of Cognac in a series of concentric circles. In descending order of prestige, they are Grande Champagne, Petite Champagne (the two Champagnes have nothing to do with the sparkling wine, but, like the Champagne region, they are known for their chalky-soil influences), Borderies, Fins Bois, Bons Bois, and Bois Ordinaires. (The term "Fine Champagne," which appears on some labels, means that the cognac was made from a blend of eaux de vie produced in the two Champagne districts; to be designated as such, however, it must contain more than 50 percent Grande Champagne grapes.)
Cognac is made through a double distillation of the base wine, which yields an eau de vie that is around 70 percent alcohol. Years of maturation in oak casks evaporates much of the alcohol (the evaporated content is poetically referred to as "the angels' share"). Depending on how much natural evaporation takes place, distilled water or low-alcohol spirits may be added to take the alcohol level of the finished brandy down to 40 percent, which is the norm, and the minimum required.
Cognacs are categorized according to the amount of aging they have received. VS, or "very special," contains eaux de vie that have spent at least two years in barrels. VSOP, or "very superior old pale," requires a minimum of four years' aging. XO, or "extra old," requires a minimum of six years, although the eaux de vie used for the better XOs tend to be much older.