Hennessy’s Plan to Move Bottling to China Sparks Strike at French Plant

Workers at Hennessy’s bottling plant in southwestern France went on strike Tuesday after the cognac maker announced it is considering relocating part of its VSOP bottling operations to China to circumvent punitive tariffs. 

Hennessy, a subsidiary of French luxury goods giant LVMH, said it is exploring options to bypass China’s tariffs, including shipping bulk cognac in vats to China for local bottling. The company sent 1,000 liters of VSOP cognac to China on Nov. 15 to test product stability, adding that any decision will depend on the trial’s results.

China, the second-largest export market for cognac after the United States, accounted for $1.7 billion in French cognac exports last year. Hennessy is among the most recognized brands in the market, alongside Rémy Cointreau and Pernod Ricard.

In October, China imposed a deposit requirement of 30.6% to 39% on European brandy imports after launching an anti-dumping investigation in January. The measure affects brandy shipped in containers under 200 liters, prompting Hennessy to explore bottling operations in China to avoid tariffs.

Protests and Labor Concerns

The proposed move sparked protests at Hennessy’s headquarters in Cognac. Videos on social media showed workers wearing jackets with the logos of French unions CGT and Force Ouvrière gathering outside the plant.

Michael Lablanche, a regional representative for CGT, said the strike involved about 500 workers, approximately half of the plant’s bottling workforce. He criticized the plan as a tariff workaround that would devastate local jobs.

“If the tests succeed, the company could relocate the entire VSOP bottling line to China to produce 600,000 cases of cognac,” Lablanche said. “There’s even talk of moving all production for the Chinese market by 2025.”

Lablanche confirmed that workers planned to continue striking on Wednesday.

Economic and Industry Challenges

Hennessy’s move comes as cognac sales in China have sharply declined amid economic challenges. From January to October 2024, China’s brandy imports dropped 20.44% in volume and 26.41% in value compared to the previous year, according to industry data. French cognac accounted for 98.89% of China’s $1.02 billion brandy imports during the period.

Meanwhile, Rémy Cointreau, another major cognac producer, said it has no plans to relocate bottling operations but will instead raise prices in China to offset tariffs. The company also suggested it might cut costs in manufacturing and advertising.

BNIC Responds

The Bureau National Interprofessionnel du Cognac (BNIC), which oversees the cognac industry, acknowledged the protests but refrained from commenting on specific company strategies. In a statement, BNIC said some brands may be forced to consider alternatives to maintain their market position in China while minimizing broader industry impacts.

“This concern, once again expressed through public demonstrations, is shared by all stakeholders in the Cognac sector, including winegrowers and trading houses,” the statement said. “The entire industry, in all its components, is trying to alert public authorities to the looming disaster.”

Hennessy has not confirmed when a final decision will be made regarding the relocation of its VSOP bottling operations.

Prior to the protests, there were positive signs as China and France resume talks on anti-dumping tariffs proposed on cognac.