Authorities in China have found evidence of the dumping in the country of brandy from the European Union – including cognac – but have stopped short of implementing tariffs on brand owners including Moët Hennessy, Pernod Ricard and Rémy Cointreau.
The Ministry of Commerce (MOFCOM) issued an update on its investigation into dumping allegations yesterday (29 August). The probe has been running since the beginning of this year.
While claiming there “is dumping of the relevant imported brandy originating from the EU [and] the domestic relevant brandy industry is threatened with substantial damage”, MOFCOM has also drawn up provisional duty rates for brandy & cognac imports from the EU, between 30.6% and 39%. The tariffs are on standby for implementation, pending the conclusion of the investigation.
The announcement drew the ire of trade association SpiritsEurope, which pronounced itself “stunned” at the news.
“We are very disappointed by this announcement,” said director general Ulrich Adam. “The tariffs, if applied, would constitute an unjustified market access barrier and have a detrimental impact on EU exports of wine-based and marc-based spirits to China, which represent the lion’s share (around 90%) of direct EU spirits exports to China in value. This decision is all the more incomprehensible because our sector has fully cooperated with the Chinese authorities throughout the entire investigation process … and has demonstrated complete transparency in its practices.
“The only silver lining at this stage is that the provisional duties will not apply for now.”
In a subsequent statement, Rémy Cointreau, which relies on China for around 25% of its total sales – mainly for the Rémy Martin cognac brand – flagged its “full cooperation” with MOFCOM over the matter. “At this stage,” the company said, “Rémy Cointreau is obliged to await MOFCOM’s final decision to be able to assess any future impact.
“China is a longstanding trading partner for the Louis XIII and Rémy Martin brands, which have enjoyed a strong presence and desirability in the country for many decades. The group will thus continue to invest there to prepare for tomorrow’s growth.”
The general consensus in the EU is that the investigation is part of wider trade tensions between the two sides after the EU started a formal review of state subsidies into electric vehicle producers in China. Earlier this month, the European Commission held back from demanding retroactive payments of redrawn duty rates on Chinese EV imports.
An anti-extravagance and -corruption programme, introduced by leader Xi Jinping in late 2012, saw the bottom fall out of the market for cognac in China and hit Rémy Cointreau particularly badly.
