Trade tensions drive French wine and spirits exports up

French spirits exports recorded a “significant increase” of 8.8% last year amid geopolitical tension and uncertainty.

Cognac exports grew by 6.6% in volume last year

Data from trade body the Fédération des Exportateurs de Vins & Spiritueux de France (FEVS) showed that spirits exports reached €4.7 billion (US$5.1bn) with “stable volumes” at 53 million cases. French wines and spirits exports hit €14bn (US$15.1bn) in 2019, an increase of 5.9%. Wine shipments grew 4.4% to €9.3bn (US$10bn).

The trade body warned that this increase was due to “anticipation shipments by business operators, in an international context of strong trade tensions and uncertainty”.

“The 2019 positive result must not be misinterpreted: international political environment and trade tensions had a severe effect on French wines and spirits exports, suggesting 2020 will be a challenging year”, said Antoine Leccia, president of FEVS.

Looking across spirits, Cognac grew by 6.6% to 17.8m cases and increased by 11.4% in value to €3.4bn (US$3.6bn). Armagnac grew by 0.4% in volume and 7.9% by value.

Vodka decreased by 3% to 11.8m cases and increased by 4.2% in value. Liqueurs dropped by 0.1% to 3.98m cases and decreased by 0.5% in value.

Calvados fell by 2% to 256,486 cases and dropped by 4.2% in value. Other wine-based spirits decreased by 0.2% to 9.6m cases and increased by 0.2% in value.

Vermouths and wine-based beverages grew 12.6% to 2.6m cases and increased 20.8% by value.

In the US, French wines and spirits exports grew by 16% in value and 5.5% in volume to €3.7bn (US$4bn).

In total, the export balance grew 8.5% to €12.7bn (US$13.7bn), “consolidating the sector’s position as France’s second largest trade surplus”.

Trade tensions

FEVS said that after a “promising first half”, export sales primarily grew due to “operators’ anticipation strategy related to the transatlantic trade tensions”.

“Uncertainties” around the Brexit negotiations resulted in French wines and spirits exports growing by 4.4% to €1.4bn (US$1.5bn) in the UK.

Sales in EU markets rose 3.7% to €4.7bn (US$5.1bn). The economic slowdown in China and political tensions in Hong Kong hit turnover with a 3.1% drop across the China, Hong Kong and Singapore zone.

“Certainly, there are some reasons for satisfaction. For example, our exports to Japan increased by 10% following the entry into force of the EU-Japan trade agreement in February 2019,” added Leccia.

Leccia said the “international environment creates a high‐risk situation for our exports” in the top three markets of US, UK and China, which alone account alone for 50% of overall sales.

On 2 October, the US government revealed its intentions to impose a 25% import tariff on EU goods, including single malt Scotch whisky, single malt whiskey from Northern Ireland, liqueurs and cordials from Germany, Italy, Spain, Ireland and the UK and wine. The dispute is over civil aircraft subsidies.

“Obviously, the situation appears most worrying – and consequently most urgent – on the US market,” added Leccia.

“Arbitrary sanctions imposed on our industry as of October 18, 2019 threaten our growth on the world’s leading market. This will have significant long‐term repercussions on exporting companies and, more broadly, on the 500,000 wine industry stakeholders.

“Without a prompt and significant action from public authorities, the sanctions will have even more impact in 2020.

“It is now essential for our government to provide practical solutions to the demands addressed by our industry since October 2019, including the creation in emergency of a €300 million compensation fund. It is time for the government to shoulder its responsibilities towards our industry.”