China penalises EU brandy as Cognac gets exemption
China’s Ministry of Commerce (Mofcom) has ended its anti-dumping investigation with a higher duty on EU brandy imports, but some Cognac makers have been granted partial relief.
Mofcom will impose a 32.2% duty on EU brandy from tomorrow (July 5).
The investigation first launched on 5 January 2024 – intended to be just one year – but was extended by three months until 5 April 2025, and again until 5 July.
Since the investigation began, trade body the Bureau National Interprofessionnel du Cognac (BNIC) revealed the value of Cognac shipments fell to €3 billion (US$3.1bn) in 2024 – a double-digit drop on the previous year, by 10.6%.
Through the course of the 18-month investigation, brandy imports have been taxed in China.
The new duty of 32.2% is lower than what was provisionally imposed in October 2024, of 34.9%.
Producers deemed by Mofcom as cooperating from the investigation will be levied with the average 32.2% duty, while companies deemed non-cooperating will keep the 34.9% measure.
The duties have been put in place for five years.
New producers who have not had their products investigated during the period can apply in writing to the investigating authority for a new exporter review, should they meet the conditions.
Major Cognac makers agree minimum price
Some Cognac producers have signed ‘minimum price commitments’ with Mofcom, which will replace the anti-dumping duties should they sell at a set price, but this has not been disclosed yet.
These include Pernod Ricard’s Martell, Hennessy and Rémy Cointreau-owned Rémy Martin.
The BNIC noted that while these conditions are not as severe as the anti-dumping tax measures, they don’t imply any wrongdoing from those who have signed.
The commitments would allow them to operate in China with ‘greater stability’.
BNIC added that the benefitting producers will ‘remain in a worse situation than the conditions they experienced on the Chinese market before the procedure launched in January 2024’.
Florent Morillon, president of the BNIC, said: “This decision marks the end of the anti-dumping investigation, but not the end of our efforts to ensure that all of our exporters regain unhindered access to the Chinese market as quickly as possible.
“In the meantime, the minimum price commitment regime offers more tolerable conditions for our companies than the announced definitive anti-dumping taxes, even if the market access they allow remains degraded.”
Pernod Ricard’s response was that it “welcomes the conclusion of China’s Mofcom Cognac anti-dumping investigation and agrees to a minimum price undertaking”.
A statement from the company read: “This agreement does not constitute an acknowledgment of dumping practices. Pernod Ricard regrets the increase in the cost of operating in China but notes that the additional costs arising from the agreed minimum price undertaking are significantly less than would be the case if the provisional anti-dumping tariffs had been made permanent.
“As this process concludes, Pernod Ricard remains committed to long term sustainable growth in China, one of our four Must Win markets, leveraging its market leading position in Cognac, and in International Spirits, that it has successfully built over its decades long engagement in the country.”
The Spirits Business has reached out to Rémy Cointreau for comment. Hennessy’s parent company refused to provide a comment.
‘Steep and unjustified’ taxes
Trade organisation SpiritsEurope, meanwhile, said it welcomes the ‘partial relief’ but is also pushing for a ‘full resolution’.
While the minimum price commitments might ‘soften’ the impact for the producers under the scheme, many of the EU’s Cognac and brandy producers are not covered and will face ‘steep and unjustified’ duties.
SpiritsEurope director General Hervé Dumesny said: “We regret the decision to impose definitive anti-dumping duties on EU wine-based and marc-based [pomace brandy] spirits producers, despite the clear evidence presented to the contrary.
“Beyond its direct impact on our sector, this decision risks fuelling trade tensions at a time when mutual cooperation is more important than ever. We nonetheless welcome the conclusion of price undertakings with certain companies, as they offer partial relief, and we urge that this option be extended to all companies that have signed up.”
The minimum pricing commitment will also apply from 5 July.
All security deposits made by EU brandy producers since October 2024 will also be returned back to them, Mofcom confirmed. No information as to when the deposits will come back to the makers has been given though.
SpiritsEurope called for Chinese authorities to apply the minimum pricing commitments to all companies that complied with procedural requirements throughout the investigation.
Its goal is for the complete removal of all duties and their related restrictions.
Dumesny added: “We urge all parties to seek a constructive political solution that will allow for the full withdrawal of these measures and restore fair and predictable market access for all EU spirits exporters.”
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