China’s high tariffs on brandy imported from the European Union could leave French companies with large stocks of cognac that would be difficult to sell in other markets. writes about this Reuters Based on industry data.
China launched an anti-dumping investigation into EU brandy in January, raising fears that cognac could suffer the same fate as Australian wine, which faces tariffs of up to 218.4%. The publication also reminds that China implemented a similar procedure for Australian wine exports, as a result of which exports fell from 1.1 billion to almost zero.
It is assumed that during Chinese President Xi Jinping’s visit to France on May 15, French authorities plan to raise the issue of anti-dumping investigation on cognac. According to BNIC, China accounted for 19.4% of cognac exports in 2023. The agency also writes that the Chinese market is one of the most profitable.
Analysts warn that in a worst-case scenario, producers will be forced to sell large stocks of cognac at discounted prices.
According to calculations made by Reuters based on BNIC data, approximately 2 billion bottles of cognac were stored in warehouses in France in 2023, 97% of which were destined for export. If China’s share remains at 19 percent, at least 368.6 million bottles will be targeted for the Chinese market. Last year France exported just over 35 million bottles to China.
“There will be such a large quantity of cognac in a warehouse north of Bordeaux. “It’s hard to imagine how they’re going to solve this problem,” says analyst Jeremy Wyatt.
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Source: Gazeta
Ben Stock is a business analyst and writer for “Social Bites”. He offers insightful articles on the latest business news and developments, providing readers with a comprehensive understanding of the business world.