In a plea to the French government, Cognac makers are calling for urgent talks with China to address escalating trade tensions that have resulted in significant monthly losses of €50 million for the industry. The dispute arose after China imposed duties on the French alcoholic beverage in October, citing alleged dumping practices and excluding the drink from the duty-free distribution channel in China.
The industry group BNIC highlighted a concerning 50% decline in monthly shipments to China due to these measures, emphasizing the critical need for swift resolution. With Cognac being a uniquely French product, the impact of these restrictions has been substantial, prompting the group to sound alarm bells over the increasing economic and social ramifications.
Despite French President Emmanuel Macron's commitment to initiating negotiations with China in November, progress on this front has been slow, with no set date for the prime minister's visit to the country or the commencement of negotiations. The delay in addressing the issue has placed significant strain on the three largest Cognac producers – LVMH’s Hennessy, Pernod Ricard SA, and Remy Cointreau SA.
Data from the lobby group revealed that Cognac producers shipped 32 million bottles to China in 2023, establishing the Asian nation as the second-largest market for the industry after the US. The increasing losses and uncertainty surrounding the trade dispute underscore the pressing need for diplomatic intervention to alleviate the challenges faced by the Cognac industry and restore stable trade relations with China.