China Slaps Brandy Duties on European Exports—Still Grants Select Exemptions

Beijing Announces Anti‑Dumping Duties on European Brandy

In a decisive move on Saturday, authorities in Beijing have slated the imposition of anti‑dumping tariffs that can reach up to 34.9% on brandy shipped from Europe. These duties will be in effect for the next five years.

Key Points

• Maximum Duty Rate: 34.9%
• Duration: 5 years
• Effective Date: Saturday (time of press release)
• Underlying Reason: Result of an investigation into potentially unfair pricing practices involving European brandy imports

Implications

Trade partners are expected to monitor the upcoming regulations closely, as the new tariff structure could reshape market dynamics for alcoholic beverages across the region.

China Unveils Heavy Tariff on EU Brandy, Impacting French Producers

French spirit makers are bracing for significant sales losses as China announced a steep trade duty on brandy imports from the European Union. The tariff, set to rise up to 34.9%, will be in effect for five years beginning 5 July.

Background of the Decision

• China’s Ministry of Commerce completed an investigation into EU brandy imports, concluding that the products posed a threat to its domestic brandy industry.
• While Cognac, a major export from France, was highlighted, key producers such as Pernod Ricard and Remy Cointreau will be exempted under new conditions.
• The investigation cited “spirit dumping”—selling foreign goods well below their regular price—as the basis for the corrective tariff, which will be added to normal customs duties.

Industry Response

The Belgium‑based trade group spiritsEUROPE expressed disappointment over the final anti‑dumping duties, averaging 32.2% for EU wine‑based spirits, marc‑based spirits, and brandies. They emphasized that legitimate trade will still face significant barriers and highlighted evidence showing no dumping on the Chinese market over the past 18 months.

Impact on Share Prices

• Pernod Ricard shares dropped by 1%
• Remy Cointreau fell 1.75%
• LVMH, parent of Hennessy and Rémy Martin, recorded a 2.1% decline around 11 CEST in Europe.

Partial Relief and Conditions

Midday news tempered the blow when it was revealed that major cognac producers would be shielded from the duties if they agreed to maintain a minimum export price. SpiritsEUROPE welcomed this partial concession and urged Beijing to extend the option to all affected EU companies.

Quotes from Industry Experts

Dan Coatsworth, investment analyst at AJ Bell, noted that the decision signifies “unfair competition and protectionism,” which could deter Chinese consumers from purchasing these products at higher prices.

SpiritsEUROPE Director General Hervé Dumesny warned that the tariff could “fuel trade tensions at a time when mutual cooperation is more crucial than ever.” He also linked the brandy decision to the EU’s 45% tariff on Chinese electric vehicles last year.