Breaking: China Allegedly Suspended Cognac in Duty-Free Chanel

China’s largest duty-free operator has allegedly removed cognac products from top producers, including Martell, Hennessy, and Rémy Cointreau, in what appears to be an escalation of trade tensions between Beijing and Brussels.

Search results for brandy on China Duty Free Group’s online store have disappeared, except for a few domestically produced brands from Koya, a domestic brandy brand owned by Changyu. Pernod Ricard’s Martell, LVMH’s Hennessy, and Rémy Cointreau’s Remy Martin are no longer available on the platform.

An importer based in Guangdong, who spoke to Vino Joy News anonymously, confirmed that customs clearance for brandy and cognac has been halted. A search by us on Chinese customs official website found that brandy clearance was usual up until November, 2024 but in the month of December, no brandy was cleared through duty-free channel.

There have been rumors that distributors and importers were instructed to remove cognac and brandy from shelves, but there has been no official confirmation.

Additionally, sources told Bloomberg that the three largest cognac producers—Pernod Ricard SA, Rémy Cointreau SA, and LVMH’s Hennessy—have been unable to restock duty-free travel hubs across China since early December.

Pernod Ricard CEO Alexandre Ricard said there had been a “technical suspension” of the duty-free regime in China starting in December but provided no further details. Pernod Ricard, which owns Martell, has lowered its earnings guidance, citing a 9% decline in its global travel retail sales, largely due to China.

It’s not the first time that China suspended imports due to technical issues amid trade dispute. Earlier in 2021, Chinese customs authorities blocked around 20,000 bottles of Australian wines, including Australian flagship wine brand, Penfolds, over what it calls a “labelling issue,” as we have reported.

75% Plunge in December

French cognac exports to China allegedly fell 75% year-on-year in December 2024, according to a Bloomberg report, as weak consumer demand, rather than trade tariffs, emerged as the primary factor behind the sharp decline.  

China’s customs data reflected a similar trend, with brandy imports shrinking sharply over the past several months. Customs data reviewed by Vino Joy News shows that in 2024, China imported 35.03 million liters of brandy, valued at US$1.23 billion, marking a 19.13% and 29.55% year-on-year decline in volume and value, respectively.

From June to December 2024, monthly brandy imports recorded double-digit declines, with June experiencing the steepest drop at 67.3%. Even in December, imports were down nearly 50% year-on-year. French brandy, which dominates the Chinese market, accounted for 99.21% of total imports, with a value of US$1.22 billion in 2024.

Due to typical international trade logistics, which require one to two months for shipments from Europe to China, the sharp decline in French cognac exports in December 2023 is expected to be fully reflected in China’s import data by February 2024.

Tariffs Not the Main Culprit

While trade measures have played a role, their impact has been less immediate than expected. Notably, the October 11 measures referenced in Bloomberg’s report were not direct tariffs but rather temporary anti-dumping deposits.

On August 29, 2023, China’s Ministry of Commerce (MOFCOM) issued a preliminary ruling that EU brandy was being dumped into the Chinese market and imposed temporary anti-dumping measures on October 11, 2023, requiring importers to place deposits ranging from 30.6% to 39.0%. However, on November 11, 2023, MOFCOM issued a supplementary notice allowing importers to use bank guarantees instead of cash deposits, effectively deferring any immediate financial burden for importers.

Despite concerns over tariffs, China’s brandy imports were already declining before the anti-dumping measures took effect. A cognac importer, who requested anonymity, said that weak consumer demand, not the anti-dumping measures, is the primary driver of the decline.

“With weaker consumer spending and a sharp pullback in corporate gifting, cognac sales in China have been sluggish throughout 2024,” the importer said. “In theory, imports should have already dropped in the first quarter, but because MOFCOM announced its anti-dumping investigation on January 5, EU suppliers rushed to ship as much stock as possible to China before any restrictions took effect, artificially boosting imports in the first half of the year.”

The importer added that the full impact of the anti-dumping measures has yet to be felt.

“Most of the cognac being sold in China right now comes from existing stock, which is not directly affected by the anti-dumping deposit requirement. The sharp drop in both France’s export figures and China’s import data is largely driven by weak market demand rather than the policy itself.”