French brandy, specifically from the wine-growing town of Cognac, has become embroiled in a commercial dispute between Beijing and Brussels over Chinese electric vehicles. Since mid-October, Beijing has imposed temporary anti-dumping measures on imports of European brandy, in response to the EU Commission’s plans to impose heavy tariffs on Chinese electric vehicles. This has caused anxiety and frustration among cognac makers in France, who feel that their industry is being sacrificed in a dispute that has nothing to do with them. The National Interprofessional Cognac Association has called on the French government to find solutions and engage in discussions with China to salvage the situation. The proposed 35% increase in customs duties on French brandy could have a significant impact on the industry, which relies heavily on the Chinese market for revenue.
France’s decision to vote in favor of imposing tariffs on Chinese electric vehicles has angered the cognac industry, as it is expected to be the country most affected by China’s retaliatory measures. Last year, China imported about €1 billion worth of French spirit, making it the biggest market in terms of value and the second biggest in terms of volume. The potential loss of this market could have severe consequences for the industry, which supports 70,000 jobs. In addition to other challenges such as bad weather, harvest issues, the economic downturn caused by the COVID-19 pandemic, and geopolitical tensions, the threat of losing the Chinese market poses a significant risk to the future of the cognac industry.
Anthony Brun, chairman of the General Union of Cognac Winegrowers, expressed concerns about the impact of the Chinese taxes on the industry. He mentioned that the cost-conscious nature of Chinese consumers would lead to a price increase of almost 50% in the second-largest market, potentially causing French brandy to disappear from China altogether. This would have catastrophic consequences for all operators, from winegrowers to merchants, and could potentially lead to the end of the cognac industry as a whole. The proposed tax on European brandies, including armagnac and Italian grappa, by China adds to the industry’s woes, potentially affecting all grape-based spirits.
The situation has raised tensions within the cognac industry, with stakeholders calling on the French government to intervene and find a resolution to the dispute. Florent Morillon, head of the National Interprofessional Cognac Association, emphasized the need for the government to engage with China and seek solutions to protect the industry. The sector is facing multiple challenges, and the potential loss of the Chinese market could have severe repercussions on the livelihoods of those involved in the industry. Finding a way to mitigate the impact of the proposed taxes and tariffs is crucial for the survival of the cognac industry.
The dispute between China and the EU over electric vehicles has inadvertently brought the cognac industry into the fray, causing uncertainty and anxiety among French brandy makers. The unexpected consequences of the trade dispute have highlighted the interconnected nature of global trade and the potential ripple effects on industries that may not be directly involved in the initial dispute. As the French government navigates the complexities of the situation, stakeholders in the cognac industry remain hopeful for a resolution that will safeguard their livelihoods and the future of the industry. The outcome of the dispute and the response from both governments will determine the fate of the cognac industry and its ability to recover from the impact of the potential loss of the Chinese market.
