Leading French alcohol industry associations have voiced strong protest over the “unjustifiable” duties on EU brandies and urged European and French authorities to resolve the issue within two months, after the Chinese Ministry of Commerce announced a preliminary finding of dumping by EU brandies last week.
The Federation of Wine and Spirits Exporters (FEVS), the French National Cognac Bureau (BNIC), and the French Armagnac National Bureau (BNIA) issued a statement decrying the move as politically motivated. This comes in retaliation to the EU’s recent trade measures against Chinese electric vehicle exports. The EU is expected to finalize tariffs on Chinese car manufacturers by Oct. 30.
Gabriel Picard, president of FEVS, warned that imposing anti-dumping duties would “directly threaten local economies and thousands of jobs.” He urged France and the EU to “start negotiations immediately,” highlighting the potentially severe impact on European exports such as Cognac and Armagnac.
Florent Morillon, president of BNIC, argued against the legitimacy of the dumping charges. “We are the collateral victim of a political conflict that exceeds our industry,” he said, emphasizing that their practices are “completely in accordance with international law,” which has been demonstrated throughout the investigation. China alone accounts for 25% of Cognac exports.
BNIA director Olivier Goujon described the potential tariffs as a “heavy blow” to economic activities in the Gascogne region, stressing that “all Chinese importers, Armagnac houses, and Chinese spirits enthusiasts will become the victims.”
Cautious Optimism
On August 29, the Chinese Ministry of Commerce issued a preliminary ruling notice on EU brandy dumping, showing a dumping margin of 30.6%-39.0%. However, temporary anti-dumping measures are not yet being taken, giving some breathing room for brandy producers.
However, the duties could be applied as soon as the Chinese authorities decide to conclude the ongoing investigation, which could happen at any time.
If such dumping margins become punitive tariffs, it would certainly be bad news for Chinese wine and spirits merchants, but a few importers we have spoke to remain cautious optimistic, given the punitive tariffs are far less damaging than these imposed on Australian wines.
A senior brandy professional, who requested anonymity, noted that premium Cognacs like those from Martell, Rémy Martin, and Hennessy are not sold at low prices, contrasting with low price dumping accusations in preliminary findings.
According to the released finding results on the ministry’s website, it detailed import and sale prices of the investigated brandy products have been rising year by year in the “Related Brandy Anti-Dumping Case Data Table”. The basis for the ruling that EU brandies were dumping is that they accounted for over 97.5% of China’s brandy imports during the investigation period, causing price undercutting and suppression of similar Chinese products, according to the ministry.
Zhang Jiarong, General Manager of Rongpu Wine in Zengcheng District, Guangzhou, considered stockpiling popular Cognacs in anticipation of future price increases. “When everyone has to raise prices, the impact on us won’t be significant,” Zhang said, adding that high recognition and good value for money make Cognacs ideal for business banquets and gifts.
Another wine and spirits importer who operates several liquor stores in Guangdong, however, planned no pre-emptive stockpiling, citing sufficient inventory and a 30% expected decrease in this year’s sales due to a sluggish consumer environment. “Our stock can last for 2 years. The overall consumer environment is poor right now, and sales of this type of product are generally declining. Based on the current trend, this year’s sales are expected to drop by 30%,” he said.
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