Pernod Ricard China has announced plans for a price increase for its Martell cognac, set to take effect on February 1, 2025. This price hike marked its first price adjustment in China since the government imposed anti-dumping measures on European brandy imports earlier this year.
The increase ranging from 3% to 5%, announced on December 9 in a letter to distributors in southern China, will affect 42 products in the Martell range starting from February 1 next year after Chinese New Year. Industry insiders, however, believed that this price adjustment was not related to anti-dumping measures, but rather aimed to stimulate the sluggish market and stabilize falling prices by instilling a “buy high, not low” investment mentality.
As one of the most popular cognac brands in China, Martell is often mentioned alongside Hennessy and Rémy Martin, collectively referred to as the “Three Giants” by industry professionals.
On October 7, the Chinese government imposed an anti-dumping deposit ranging from 30.6% to 39.0%, following the preliminary ruling on EU brandy dumping in August. The recent price increase by Pernod Ricard China was its first adjustment since the anti-dumping announcement.
“At merely single digits, Pernod Ricard’s price adjustment certainly cannot cover the anti-dumping tax rates,” said an alcohol merchant who spoke on condition of anonymity. “This move by Pernod Ricard appeared more like a routine price adjustment.”
However, this alcohol merchant pointed out that routine price adjustments typically occurred in April or May of the following year. By scheduling this adjustment for February 1, the timing appears strategic, aligning with the pre-Chinese New Year peak season.
The announcement comes as China’s cognac market struggles with declining sales. From January to October, cognac imports dropped 13.9% in volume and 23.7% in value compared to the same period last year, according to industry data.
“Due to the poor market performance, many distributors sold off inventory to recover funds. However, with an expectation of price increases, distributors would not rush to sell their stock,” he said.
The poor sales are reflected in Pernod Ricard’s financial performance. According to Pernod Ricard’s 2024 financial report, net sales for the reporting period (from July 1, 2023, to June 30, 2024) in the Chinese market reached €1.16 billion, reflecting a 10% decrease year-on-year.
Its performance did not improve as the holiday season approached. In the first quarter of the 2025 fiscal year (from July 1 to September 30, 2024), Pernod Ricard’s sales in the Chinese market plummeted further by 26% year-on-year, largely due to a significant decline in Martell cognac sales. The company attributed this downturn to the weak Chinese market and subdued consumer demand leading up to the summer and Mid-Autumn Festival.
The merchants are also feeling the pinch. Zhang Jiarong, General Manager of Rongpu Wine in Guangzhou’s Zengcheng District, stated, “We are entering the peak season of the year, but business gatherings seem to be fewer, and there are fewer customers coming to buy wine.”
“This year, cognac sales have decreased by around 50% compared to last year,” Zhang added.
The weak sales of cognac in China reflect a broader trend that is not limited to Pernod Ricard. This raises the question of whether the other two cognac giants will adopt similar strategies to stimulate sales during the peak season.
While Rémy Martin has provided verbal notice regarding potential price adjustments, no official statement was issued by the brand. In contrast, Hennessy has not taken any related actions.
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