French Cognac Industry Faces Uncertain Future Amid Chinese Tariff Threats, France

LONDON – High Chinese tariffs on EU brandy are causing concern among French cognac makers who may face challenges in selling their excess stock. The potential impact of these tariffs on the industry and major spirits companies like Pernod Ricard and Remy Cointreau has analysts and investors on edge. Chinese authorities are investigating brandy imports from the EU, sparking fears of a similar fate suffered by Australian wine due to high tariffs imposed by China. The cognac industry’s future could hinge on the outcome of talks during Chinese President Xi Jinping’s visit to France where authorities plan to address the investigation. With a significant portion of cognac destined for the Chinese market, the implications of these tariffs could be profound, affecting not just companies but also the entire cognac ecosystem and economy of the Cognac region in France. If demand drops significantly, producers could face the challenge of dealing with surplus stock and potential price cuts that may impact margins and brand value. While hopes remain high for a swift resolution to the dispute, the industry is preparing for various scenarios to navigate the uncertain terrain ahead.