Hundreds of workers at a bottling facility for Hennessy cognac in France have walked out over reports the LMVH-owned brand could look to circumvent Chinese tariffs by bottling in-market.
After the Chinese Ministry of Commerce (Mofcom) last month said it would introduce anti-dumping duties on imports of European brandy, cognac producers have been exploring ways to reduce the impact on sales in what is the second-largest market for the spirit globally.
Despite a recent downturn in sales, cognac exports to China accounted for $1.7bn (£1.35m) in 2023.
Trade body the Bureau National Interprofessionnel du Cognac said suppliers “may be forced to explore all options that would enable them to maintain the presence of the appellation on the Chinese market” following the introduction of duties of more than 30%.
Hennessy is said to be exploring the possibility of shipping cognac to China where it could be bottled locally.
The current wording of Chinese tariff measures means they only apply to containers below 200 litres in size, meaning shipping cognac in bulk could avoid tariffs altogether.
The plan has this week prompted around 500 workers, around half of the workforce at Hennessy’s bottling plant in cognac, to walk out, reported Reuters.
Michael Lablanche, a regional representative for the CGT labour union, said Hennessy management was preparing to send a test shipment of 1,000 litres of its VSOP Cognac to China to test for stability.
Depending on the results of the test, the supplier could look to shift bottling for its VSOP to entirely in-market in 2025, Lablanche said.
Such a move would be a “disaster” for workers, he added.
Rémy Cointreau, maker of Rémy Martin cognac, has said it plans to raise prices to mitigate the impact of tariffs imposed by Beijing. It added it could also look to reduce manufacturing and advertising spend in the market.
Pernod Ricard, which owns the Martell brand, has also indicated it will raise prices on the back of tariffs.
Moët Hennessy has been approached for comment.
No comments yet