Cognac brand owners have been prevented from refilling their stock levels in China’s global travel retail sales channel since the end of last year, Global Drinks Intel has learned.
A report by Bloomberg late last week cited “people familiar with the matter” as saying the likes of Moët Hennessy, Pernod Ricard and Rémy Cointreau have “been unable to restock duty-free travel hubs across China since early December”. While none of the three companies would comment to Bloomberg, Global Drinks Intel has discovered that this is indeed the case.
When contacted yesterday, a spokesperson for Rémy Cointreau, which owns the Rémy Martin cognac, would not comment further, while a spokesperson at Martell owner Pernod Ricard referred Global Drinks Intel to the Bureau National Interprofessionnel du Cognac, although nobody was immediately available at the trade association.
The cognac category has been hampered in China since October, when the country’s Ministry of Commerce implemented anti-dumping tariffs on all grape-based spirits imports from the European Union. According to Bloomberg, the tariffs were not expected to impact duty-free sales in the country. “When the measures were announced,” the news service stated, “producers expected that they would be able to continue selling through duty-free channels without triggering the tariffs.”
In the three months to the end of December, Rémy Cointreau’s cognac division saw its sales fall by 22% as the group cited unspecified weakness in China. Over at Moët Hennessy, meanwhile, the group’s spirits unit, home to the Hennessy brand, was down 22.2% over the same period, with the “post-Covid normalisation of demand” offered as the root cause.
Pernod Ricard’s fiscal second quarter – the three months to the end of December – declined 3% in sales terms, with Martell “in strong decline contributing to circa 90% of total group net sales decline, due to China and Global Travel Retail”.
An attempt in November by Moët Hennessy to bypass the tariffs by trialling in-market bottling for China resulted in industrial action by workers in Cognac.
