China has imposed tariffs of as much as 34.9% on European imports of brandy, wine-based spirits and marc-based spirits, though several key producers have agreed to minimum import prices to remain exempt from the swingeing levies.
Beijing’s Ministry of Commerce (MOFCOM) today (4 July) confirmed it would impose the tariffs following the conclusion of an investigation into claims European producers had been “dumping” their products at lower prices on the Chinese market – leading to a “material threat of injury” to its domestic brandy market.
The tariffs – ranging from 27.7% to 34.9% over the next five years – are due to come into force on Sunday. However, Chinese authorities have exempted major cognac producers Pernod Ricard, Rémy Cointreau and Möet Hennessy from the duties, provided they sell at a yet-to-be-disclosed minimum price.
China launched its anti-dumping investigation in January 2024, in what European media outlets described as a retaliation to the EU’s decision to impose high import tariffs on Chinese electric vehicles – over similar claims of the “dumping” of cheap cars on the European market.
Industry body Spirits Europe said China’s move came “despite the substantial evidence submitted by the EU spirits sector over the last 18 months, clearly demonstrating the absence of any dumping practices on the Chinese market”.
The threat of the tariffs had raised concerns major suppliers could have to exit the lucrative Chinese market, with an accompanying financial blow. Pernod Ricard’s sales in China slumped by 25% in the first half of its financial year.
Amid an accelerating threat of significant export levies, the booze giant’s director of finance Hélène de Tissot told journalists last September there was “a lot at stake” in terms of the potential need to increase retail prices and review its investments in the country.
While several affected companies had entered into price undertakings with MOFCOM, Spirits Europe warned terms remained “less favourable than the conditions that existed prior to the launch of the investigation in January 2024”.
Moreover, “a significant number of EU producers are not covered by these arrangements and will face steep and unjustified duties”, it added.
Responding to today’s announcement, Pernod Ricard stressed its minimum pricing agreement “does not constitute an acknowledgment of dumping practices”.
It added it “regrets the increase in the cost of operating in China but notes that the additional costs arising from the agreed minimum price undertaking are significantly less” than MOFCOM’s tariffs.
“As this process concludes, Pernod Ricard remains committed to long-term sustainable growth in China, one of our four must-win markets, leveraging its market leading position in cognac, and in international spirits, that it has successfully built over its decades-long engagement in the country,” the supplier said.
Rémy Cointreau, meanwhile, said it would now update its annual forecasts when publishing first-quarter results on 25 July. The Rémy Martin brand owner derives some 70% of its sales from cognac and last month scrapped its 2030 sales growth ambitions, citing tariffs and broader macroeconomic uncertainty.
The impact of Chinese tariffs would be “far less restrictive” than it had initially anticipated when publishing its full-year results last month, it said.
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